WEEK 6 ASSIGNMENT

In this assignment, use two quantitative methods for evaluating a new social media-based product promotion software package. You will use the techniques provided below to calculate the NVP value of the proposed technology. You will also put together a small proposal using PowerPoint and the provided Cheapos NVP Excel Workbook. Below there is a attach excel table to be completed Using the case.

Use Case:

Cheapos is a new company that sells very cheap plastic products. Their product portfolio includes housewares, tools, toys, decorations, and office accessories. The company's mission is to draw in customers from dollar stores (e.g., Dollar Store, Dollar Tree, etc.) and FiveBelow to their site and delivery services. Customers who order online will have their ridiculously cheap products delivered to any location they choose. Cheapos wants to fully integrate with Amazon, Etsy, and Zulily platforms in order to market their cheap products. They have selected a software package that is self-managed, allowing the company to promote their products on those platforms.

Note: You are allowed to adjust this use case by adding more detail to make your proposal more insightful. However, you must keep the basic use case details outlined above intact.

Cash Outflows:

• Software Licensing:
  • $87,000 over 3 years, starting in year 1
• Cloud Hosting:
  • $1,250 monthly, starting year 0
• Software Maintenance/Support:
  • $5,000 annually, starting year 1
• Implementation Costs:
  • $75,000 year 0 only

Cash Inflows:

• Increased Revenue:
  • $13,500 annually, starting in year 1(beginning1yr to3y)
  • $19,500 annually, starting year 4( beginning 4yr to 5yr)
• Reduces Labor Expense:
  • $5,000 annually, starting in year 1
• Reduced Infrastructure Expense:
  • $18,500 year 0 only

Note: Assume a year is defined as January - December. Unless otherwise stated in the use case, calculate the inflows and outflows for the entire year or for a specific grouping of years (e.g., years 1-3 and years 4-5).

Methods:

1. Net Present Value (NPV)
2. Internal Rate Of Return (IRR)

Please refer to Chapter 7 (pp. 149-152) for an introduction to both NPV and the IRR methods.

IT Investment Proposal:

Your analysis of the use case should include the following:

• Summary: One or two slides explaining the use case.
• Justification: One or two slides summarizing the results of your analysis.
• Results: One slide with the Excel table showing the NVP table.

Here is the Excel table to be filled out.

Net Present Value Table
Investment Term		Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Cash Outflows		$0	$0	$0	$0	$0	$0
Cash Inflows		$0	$0	$0	$0	$0	$0
IRR	0%
NPV =	$0		Formula: =C6+NPV(B8,D7:H7)