Strategic analysis of paper

Strategic analysis of paper

BUDGET TOOL

Gray cells contain calculations that should not be altered.
Source Outdoors
Technology Budgeting Tool
6/21/18
Company Data
Required rate of return 10%
Tax rate 30%
Initial Investment YEAR 1 2 3
Hardware costs (e.g., servers, networking hardware, PC upgrades) $25,000
Purchased software costs / licenses (e.g., e-commerce, ERP, CRM software) $20,000
Development costs (e.g., systems design and configuration / development) $10,000
Training costs (e.g., develop and conduct initial training) $20,000
Conversion costs (e.g., initial data conversion from existing systems being replaced) $0
[Other initial investments] $0
[Other initial investments] $0
Total Initial Investments $75,000
Benefits from Technology Strategy YEAR 1 2 3
Increased sales and revenue $150,000 $175,000 $180,000
Reduced personnel costs $25,000 $25,000 $25,000
Reduced product costs $0 $0 $0
Reduced distribution costs $0 $0 $0
Reduced advertising and marketing costs $0 $0 $0
[Other benefits] $0 $0 $0
[Other benefits] $0 $0 $0
[Other benefits] $0 $0 $0
Total Benefits $175,000 $200,000 $205,000
Costs (Excluding Initial Capital Investments) YEAR 1 2 3
Depreciation on capital expenditures (calculation uses three-year period) $25,000 $25,000 $25,000
Software licensing fees $5,000 $5,000 $5,000
Ongoing user support and training (e.g., help desk and training personnel) $10,000 $10,000 $10,000
Ongoing systems support (e.g., IT maintenance) $10,000 $10,000 $10,000
Hosting / Cloud computing $15,000 $15,000 $15,000
General and administrative $5,000 $5,000 $5,000
[Other costs] $0 $0 $0
[Other costs] $0 $0 $0
[Other costs] $0 $0 $0
Total Costs $70,000 $70,000 $70,000
Totals YEAR 1 2 3
Net Benefits (Costs) $105,000 $130,000 $135,000
Tax $31,500 $39,000 $40,500
Value after tax $73,500 $91,000 $94,500
Depreciation added back $25,000 $25,000 $25,000
Cash flow ($75,000) $98,500 $116,000 $119,500
Cumulative cash flow ($75,000) $23,500 $139,500 $259,000
Evaluation Metrics
Net present value (NPV) $200,195
Internal rate of return (IRR) 129.16%
Payback period (in years) 0.76
Three-year total ROI: (total benefits before taxes – total costs)/total costs 176.19%

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