Dirt Bikess management would like to analyze the return on its investment in its employee learning management system. The system runs on the human resources (HR) PCs using PC database software. Because the HR staff recently received new desktop PC systems with database and other productivity software, there are no additional hardware and software purchase costs. The main costs include the initial cost of designing and implementing the database (business staff cost of $5,000; information systems staff cost of $15,000), gathering and adding employee skills and training data to the database ($5,500 initial data conversion cost plus $1,000 annual data entry costs), and ongoing maintenance and support ($3,000 annually). Human resources staff members believe the new application could save each of them two hours of work per week. (Their annual salaries are $37,000 and $42,000 each and work 40 hours / week over the course of year) The company would also save about $11,000 annually in employee recruiting costs because it would be able to fill many vacant positions with existing employees, thereby reducing its costs for recruiting outside the company. The system would not be implemented until the end of 2017 and would return benefits from 2018 to 2022.

Use Excel to prepare a report for management analyzing the return on the investment for this system over a five-year period using the following capital budgeting models:

net present value (NPV)

accounting rate of return on investment (ROI)

internal rate of return (IRR).

Given			Cost/Saving	Recurrence			2017	2018	2019	2020	2021	2022	Total
Design and Implementation
	Business Staff		$5,000.00	Investment Cost				0	0	0	0	0
	IT Staff		$15,000.00	Investment Cost				0	0	0	0	0
Data Input
	Initial Conversion		$5,500.00	Investment Cost				0	0	0	0	0
	Annual Data Entry		$1,000.00	Annual Cost				1000	1000	1000	1000	1000
Maintenance & Support
	Annual		$3,000.00	Annual Cost
Savings						Total Costs per Year	0						0
	2 hours of work / week per HR Employee (note: 1 year = 52 work weeks = 2080 work hours )
	HR Employee 1		$1,850.00	Annual Cost Savings			0	$1,850.00	$1,850.00	$1,850.00	$1,850.00	$1,850.00
	HR Employee 2			Annual Cost Savings			0
	Annual Recruiting Costs		$11,000.00	Annual Cost Savings			0
Annual HR Salaries
	HR Employee 1		$37,000.00
	HR Employee 2		$42,000.00
						Total Savings per Year	0						0
						Net Cash Flow per Year	0	0	0	0	0	0
Calculate for 5 Years of Use - 2018 thru 2022
Useful Life of Project (includes initial design/implementation) - 6 years
Depreciation is calculated as the total initial investment costs
			Value
Net Present Value (NPV) - assume 5% interest rate
Accounting Rate of Return on Investment (ROI)
Internal Rate of Return (IRR)