PLEASE HELP!!

1. Calculate the payback period of this project.

2. Calculate the NPV of this project for 3 years after breakeven.

3. Calculate the 4-year ROI.

4. What will be the additional loss if the project is delayed by 20 days (1 month)?

5. Is there a financial argument for bidding on this project? Justify your answer

We are MeterIt, a firm that makes money off of private car parks. Cars enter our car park, and the driver pays a sum to park in the car park for a limited time. The driver then puts their receipt on the windscreen. Our car park inspectors patrol the car park to determine whether people have overstayed their parking. If they do, we charge a fine. Every year, we lose $1.4 million in fines due to errors made by our parking inspectors.

We intend to develop an IT system to reduce those losses by half. The core of the IT system will be an app on the inspectors phone. Using the phone camera, the app will scan the ticket on the windscreen, and the car license plate. The app then connects via Bluetooth to a printer on the inspectors waist to auto-print the ticket. The app then connects via wifi or 4G to the HQ server to update our records.

We want to determine whether this project makes financial sense.

We have a total of 20 inspectors. As part of this project, all 20 inspectors will be issued official work phones. Each phone costs $1,500. We will also have to buy a new server to communicate with all the phones which will cost us $15,000. Note these prices assume total cost of ownership- they are not the retail price of the machines, but includes things like setup, etc. Assume all capital expenses are to be fully used on this project, and there is no resale value.

Our expected opex costs can be summed up as follows

Cost	Qty	Time/unit	Cost per man day
Database developer	1	15d	2500
Developer	2	45d	1500
Project manager	1	80d	2800
Hardware engineer	1	15d	1500
Documentation specialist	1	15d	300
Tester	2	15d	1500

Once the system goes live, we anticipate our additional maintenance workload will amount to $10000 a year. In addition to this, we are charging $1000 per day to the project as overhead. This includes electricity, administrative and secretarial support.

We assume this is an 80 day project (4 months). For any additional days worth of delay, we can calculate the additional cost to be the average opex cost per day + the cost of overhead.

Note we cannot book any productivity improvements to the system for the year the system is in development. So, while this is only a 4 month project, the go live date will be the following year.

The interest rate on our money is 7%.