Sam is the VP of Supply Chain and wants to know if a new supply chain system that should help reduce inventory will be economically viable. He has asked you to perform a Cost-Benefit Analysis.

All development will take place in 2023, the system will be operational at the start of 2024. You estimate that development costs (which will take place only in 2023) will total $40,000. Operating costs are estimated to be $15,000 per year over the next 3 years (2024-2026). Benefits will include increased sales of $25,000 per year and cost reductions (from reduced inventory) of $10,000 per year over the next 3 years. All benefits and operating costs are constant each year over the life of the project. Costs and benefits are realized at the start of each year (like the example done in class). Based on economic forecasts you assume that the interest rate will be 8% over these years.

Please use Excel to complete your analysis using a new, blank Excel worksheet to answer the following questions. Insert the spreadsheet into your word file. Include answers to the following:

(a) What is the Net Present Value and ROI of the proposed system? (4 pts) (b) Include a breakeven chart like we used in class showing costs versus benefits. (4 pts) (c) Provide a brief explanation regarding WHY you think the project is economically viable (or not). (2 pts a sentence)