Your CEO is worried a similar situation could happen at your company and has asked you to try and determine if investing in greater cybersecurity is a smart move. You call your friend who works for a major cybersecurity firm and ask what products, pricing, and guarantees they have.

Well, the bad news is they have no guarantees but they can show evidence that even one major attack would result in significant losses for your company. Here is the information you receive:

Cyber attacks are up 600% from pre-pandemic levels.

The average cost of a cyber attack on a small business ranges from $120,000 to $1.24 million per successful attack.

71.1 million people fall victim to cyber crimes yearly.

Your company has been quoted $1.5 million for a new cyber defense system. The new program will likely protect the company for 3 years and then need to be replaced as technology improves. Using sophisticated detection skills, they determine that your companys website faces approximately 800 cyber security incidences a day, 365 days a year. They also estimate that 1 in 500 attacks are successful, and the cost of the average attack is $1,000, after tax due to lost merchandise, notification of the customers affected and time spent by employees following up on the incidents. Should you buy the system? Your company estimates its cost of capital is 7.5%.

Using Excel, calculate the payback, discounted payback, NPV, and IRR of the proposed new cybersecurity system.