1. The Board discuss the PMs figures and call her back to approve the project but with some significant amendments. They have cut her original implementation budget by 10% and directed her to outsource the enhancements and maintenance to reduce costs in Year 1 to 10% and 5% of the implementation cost for Years 2 to Year 5 but do accept that this would need to return to 10% of the implementation cost for Years 6 and 7. Although they generally agreed with the PMs prognosis of inflation rates, the Board wanted the discount factor to be kept simple so they instruct her to keep it at 2% throughout in her table (which matches her expectation of benefits to the company from the project brought about by the implementation). The PM has completed Years 1 to 4 but has delegated you to complete Years 5 to 7 (Figure 2 in Appendix 1).

Year	0	1	2	3	4	5	6	7
Costs:	270,000	27,000	13,500	13,500	13,500
Current profits:	1,000,000
Expected Annual Profits:	1,000,000	1,020,000	1,040,400	1,061,208	1,082,432
Benefits:	0	20,000	40,400	61,208	82,432
Net Flow:	-270,000	-7,000	26,900	47,708	68,932
Discount Factor:	1.0000	0.9804	0.9612	0.9423	0.9238
Discounted Net Profit:	-270,000	-6,863	25,855	44,956	63,683
Dis.Cum. Profit:	-270,000	-276,863	-251,007	-206,051	-142,368