Due to the COVID 19 pandemic your organization must choose a remote model or shutdown until the end of the pandemic. If you choose a remote model, the organization has identified a number of cost factors and values for the new system, summarized in the following tables: Development CostsPersonnel 2 Remote Analysts 400 hours/ea @ $50/hour 4 programmers 250 hours/ea @ $55/hour 1 Remote Transition Consultant 200 hours/ea @ $40/hour 1 Remote Specialist 50 hours/ea @ $50/hour Development Costs-Training Remote Training $50,000 Development Costs- Hardware/Software 1 Additional Server Space $18,700 Cloud/VPN license $50,000 5 Laptops $2000/laptop Zoom license $10,000 Annual Operating Costs-Personnel Annual Operating Costs $20,000 Your organization has an annual 200,000 worth of sales. Using a remote model, sales will be 50% less. Using a format similar to the spreadsheets in this course, develop a spreadsheet that summarizes this project's cash flow, assuming a 4-year useful life after the project is developed. Compute the present value of the cash flows, using an interest rate of 9%. R NPV = (1 + i) where: Re = Net cash inflow-outflows during a single period t i = Discount rate or return that could be earned in alternative investments t = Number of timer periods Current Value of Investment Cost of Investment ROI Cost of Investment 1. What is the NPV for this project? 2. What is the ROI for this project? 3. What is the break-even point? 4. Would you do the project? Why or why not? 5. What is the NPV and ROI if the pandemic were over in 2022? What are the risks your organization faces if you don't do the project? Due to the COVID 19 pandemic your organization must choose a remote model or shutdown until the end of the pandemic. If you choose a remote model, the organization has identified a number of cost factors and values for the new system, summarized in the following tables: Development CostsPersonnel 2 Remote Analysts 400 hours/ea @ $50/hour 4 programmers 250 hours/ea @ $55/hour 1 Remote Transition Consultant 200 hours/ea @ $40/hour 1 Remote Specialist 50 hours/ea @ $50/hour Development Costs-Training Remote Training $50,000 Development Costs- Hardware/Software 1 Additional Server Space $18,700 Cloud/VPN license $50,000 5 Laptops $2000/laptop Zoom license $10,000 Annual Operating Costs-Personnel Annual Operating Costs $20,000 Your organization has an annual 200,000 worth of sales. Using a remote model, sales will be 50% less. Using a format similar to the spreadsheets in this course, develop a spreadsheet that summarizes this project's cash flow, assuming a 4-year useful life after the project is developed. Compute the present value of the cash flows, using an interest rate of 9%. R NPV = (1 + i) where: Re = Net cash inflow-outflows during a single period t i = Discount rate or return that could be earned in alternative investments t = Number of timer periods Current Value of Investment Cost of Investment ROI Cost of Investment 1. What is the NPV for this project? 2. What is the ROI for this project? 3. What is the break-even point? 4. Would you do the project? Why or why not? 5. What is the NPV and ROI if the pandemic were over in 2022? What are the risks your organization faces if you don't do the project
