imagine you are a representative of management in the company you have selected for your Week 6 Assignment and you must make a capital budgeting decision. The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year's profits. You are charged with describing the important considerations in the decision-making process to upper management. In your response, be sure to include the following:

A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.

An explanation of how these factors are significant to the company.

A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.

A calculation of the proposed return on investment based on criteria you select and justification for that ROI.

According to the United States Securities and Exchange Commission Medtronic net profit was $3,095 million. As a management representative for MDT, implementing a new computer network system costing 10% of profits would require investing $310 million. This implementation would assist operations of medical equipent to be efficient and would be beneficial for both the company and its consumers. MDT, has incorporated a newer technology in order to facilitate the method their customers access data from their devices. This investment should further assist one of the leading technological medical device corporation and definitely increase the company's overall revenue.

Choosing to invest $310 million into a new computer network system will be based on the beneficial outcome for MDT. Many factors are considered prior to making a final decision. Not only does such investment need to produce sufficient revenue, but it should also assist the company by their goals securing data that can be used for healthcare management. Some of the quantitative factors that we will be considering are the net present value (NPV) of the project and return on investment (ROI), of which both will help measure the outcomes of accepting the investment. These types of financial analysis will help evaluate the project and assist management in either accepting or rejected the project based on the numerical outcomes. Overall the price and return on investment will help me determine if a new computer network system is worth it.

If we use NPV in this case, assuming an 11% discount rate for 10 years, the calculations are as followed:

Period

Year 0

$310,000,000

Year 1

279,279,279.28

Year 2

251,602,954.31

Year 3

226,669,328.20

Year 4

204,206,601.98

Year 5

183,969,911.70

Year 6

165,738,659.19

Year 7

149,314,107.38

Year 8

134,517,213.85

Year 9

121,186,679.15

Year 10

109,177,188.42

In order to calculate the projects ROI, the gain from the investment minus the original investment and divide it by the original investment:

(8,821-310) / 310 =27.45%ROI

i was told NPV was incorrect, i need assistance in obtaining correct NPV