Request:	Should we invest $100,000 in the proposed security solution to reduce the risk of an issue below 10%?
	Answer:
				Year
			0	1	2	3	4	5	Total
Purchase Cost (initial)			$100,000						$100,000
Annual fee	$0			$0	$0	$0	$0	$0	$0
Training costs	$0		$0	$0	$0	$0	$0	$0	$0
Savings due to efficiency	$0		$0	$0	$0	$0	$0	$0	$0
Reduction in threat:
Impact	$500,000
Current risk	10%
Expected loss	$50,000
New risk	4.0%
New expected loss	$20,000
Benefit	$30,000	annually	$0	$30,000	$30,000	$30,000	$30,000	$30,000	$150,000
Total Cash Outflows			$100,000	$0	$0	$0	$0	$0	$100,000
Total Benefits			$0	$30,000	$30,000	$30,000	$30,000	$30,000	$150,000
Net Benefits			-$100,000	$30,000	$30,000	$30,000	$30,000	$30,000	$50,000
Discount rate	10%
Discounted value			-$100,000	$27,273	$24,793	$22,539	$20,490	$18,628	$13,724
NPV	$13,723.60
IRR	15%

Instructions

Using the spreadsheet provided, edit the cells to include the following controls: Annual fee cannot exceed 8% of purchase cost. Training costs cannot exceed $12,000 in year 0 and $3,000 thereafter. (Enter the annual training costs in cell B10 and enter initial year 0 training costs in cell D10). Annual savings due to efficiency cannot exceed $5,000, but must be zero in year 0. Cell C2 (highlighted in yellow to the right of the word Answer) must force entry of either YES or NO no other values can be accepted. (hint: use cells A30 and A31 as the source for a dropdown list). Your name must appear in cell C3, and the cell must ensure that any name entered cannot exceed 30 characters total. Cell B8 (annual fee) must NOT permit any alphabetic text. The reduction in risk due to the security investment (cell B18) must range between 2% and 8%, inclusive. Lock the spreadsheet so that data can only be entered in these cells (all highlighted in yellow in the spreadsheet): C2 C3 B8 B10 B12 B18 D10 A30 A31