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Purpose:

Sheet Name
Table of Contents
Costs
Benefits
Cost Benefit Analysis
Break Even Chart
Harold Park
3/20/2014
Perform a cost benefit analysis of SAP implementation

Sheet Description
Explains what is in the workbook
Contains the the costs for the SAP Implementation
Contains the benefits for the SAP Implementation
Contains the economic feasability for the SAP Implementation
Contains the Break Even Chart for the SAP Implementation
Implementation Costs Dollar Amount
Software Licenses $ 500,000.00
Hardware $ 75,000.00
Network and Communications Upgrades $ 25,000.00
Training $ 25,000.00
Configuration and Implementation $ 2,750,000.00

Total $ 3,375,000.00

Maintenance Costs Dollar Amount

Software License Maintenance Fees $ 80,000.00
New IT Employees (2 x 90,000) $ 180,000.00
Total $ 260,000.00
Benefits Dollar Amount
Increased Profit Due to Increased Sales $ 750,000.00
Reduced Inventory Holdings Costs $ 200,000.00
Reduction in Clerical Workforce (4 x 55,000) $ 220,000.00

Total $ 1,170,000.00
Discount Rate 15.0000%

0 1
Costs
Implementation Costs $ 3,375,000.00 $ -
Maintenance Costs $ - $ 260,000.00
Present Value Factor 1 0.8695652174
Present Value of Costs $ 3,375,000.00 $ -
Net Present Value of All Costs $ 3,375,000.00 $ 3,601,086.96

Benefits
Recurring Benefits
Present Value Factor
Present Value of Benefits
Net Present Value of All Benefits
$ - $ 1,170,000.00
1 0.8695652174
$ - $ 1,017,391.30
$ - $ 1,017,391.30

Overall Net Present Value $ (3,375,000.00) $ (2,583,695.65)

$3,000,000.00

$2,000,000.00

$1,000,000.00

$-
Dollars 0 1 2 3 4
$(1,000,000.00)

$(2,000,000.00)

$(3,000,000.00)

$(4,000,000.00)
 2 3 4 5

$ - $ - $ - ###
$ 260,000.00 $ 260,000.00 $ 260,000.00 $ 260,000.00
0.7561436673 0.6575162324 0.5717532456 0.4971767353
$ - $ - $ - ###
$ 3,797,684.31 $ 3,968,638.53 $ 4,117,294.37 $ 4,246,560.33

$ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00

0.7561436673 0.6575162324 0.5717532456 0.4971767353
$ 884,688.09 $ 769,293.99 $ 668,951.30 $ 581,696.78
$ 1,902,079.40 $ 2,671,373.39 $ 3,340,324.68 $ 3,922,021.46

$ (1,895,604.91) $ (1,297,265.14) $ (776,969.69) $ (324,538.86)

Overall Net Present Value

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Number of Years

Overall Net Present Value

 6 7 8 9

$ - ### $ - $ -
$ 260,000.00 $ 260,000.00 $ 260,000.00 $ 260,000.00
0.4323275959 0.3759370399 0.3269017738 0.284262412
$ - ### $ - $ -
$ 4,358,965.50 $ 4,456,709.13 $ 4,541,703.59 $ 4,615,611.82

$ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00

0.4323275959 0.3759370399 0.3269017738 0.284262412
$ 505,823.29 $ 439,846.34 $ 382,475.08 $ 332,587.02
$ 4,427,844.75 $ 4,867,691.09 $ 5,250,166.16 $ 5,582,753.19

$ 68,879.25 $ 410,981.96 $ 708,462.57 $ 967,141.37

ue

12 13 14 15 16 17 18 19 20
 10 11 12 13

$ - $ - $ - $ -
$ 260,000.00 $ 260,000.00 $ 260,000.00 $ 260,000.00
0.2471847061 0.2149432227 0.1869071502 0.1625279567
$ - $ - $ - $ -
$ 4,679,879.84 $ 4,735,765.08 $ 4,784,360.94 $ 4,826,618.21

$ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00

0.2471847061 0.2149432227 0.1869071502 0.1625279567
$ 289,206.11 $ 251,483.57 $ 218,681.37 $ 190,157.71
$ 5,871,959.29 $ 6,123,442.86 $ 6,342,124.23 $ 6,532,281.94

$ 1,192,079.45 $ 1,387,677.78 $ 1,557,763.29 $ 1,705,663.73

 14 15 16 17

$ - $ - $ - $ -
$ 260,000.00 $ 260,000.00 $ 260,000.00 $ 260,000.00
0.141328658 0.1228944852 0.1068647697 0.0929258867
$ - $ - $ - $ -
$ 4,863,363.66 $ 4,895,316.23 $ 4,923,101.07 $ 4,947,261.80

$ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00

0.141328658 0.1228944852 0.1068647697 0.0929258867
$ 165,354.53 $ 143,786.55 $ 125,031.78 $ 108,723.29
$ 6,697,636.47 $ 6,841,423.02 $ 6,966,454.80 $ 7,075,178.08

$ 1,834,272.81 $ 1,946,106.79 $ 2,043,353.73 $ 2,127,916.29

 18 19 20 Total

$ - $ - $ -
$ 260,000.00 $ 260,000.00 $ 260,000.00
0.0808051189 0.0702653208 0.0611002789
$ - $ - $ -
$ 4,968,271.13 $ 4,986,540.11 $ 5,002,426.18 $5,002,426.18

$ 1,170,000.00 $ 1,170,000.00 $ 1,170,000.00

0.0808051189 0.0702653208 0.0611002789
$ 94,541.99 $ 82,210.43 $ 71,487.33
$ 7,169,720.07 $ 7,251,930.50 $ 7,323,417.82 $7,323,417.82

$ 2,201,448.95 $ 2,265,390.39 $ 2,320,991.64 $2,320,991.64

 0 1
Net Present Value of All Benefits $ - $ 1,017,391.30
Net Present Value of All Costs $ 3,375,000.00 $ 3,601,086.96

$8,000,000.00
$7,000,000.00
$6,000,000.00
$5,000,000.00

Dollars $4,000,000.00
$3,000,000.00
$2,000,000.00
$1,000,000.00
$-
1 2 3 4 5 6

Net Pres
 2 3 4 5
$ 1,902,079.40 $ 2,671,373.39 $ 3,340,324.68 $ 3,922,021.46
$ 3,797,684.31 $ 3,968,638.53 $ 4,117,294.37 $ 4,246,560.33

Break Even Chart

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2

Number of Years

Net Present Value of All Benefits Net Present Value of All Costs
 6 7 8 9
$ 4,427,844.75 $ 4,867,691.09 $ 5,250,166.16 $ 5,582,753.19
$ 4,358,965.50 $ 4,456,709.13 $ 4,541,703.59 $ 4,615,611.82

15 16 17 18 19 20 21
 10 11 12 13
$ 5,871,959.29 $ 6,123,442.86 $ 6,342,124.23 $ 6,532,281.94
$ 4,679,879.84 $ 4,735,765.08 $ 4,784,360.94 $ 4,826,618.21
 14 15 16 17
$ 6,697,636.47 $ 6,841,423.02 $ 6,966,454.80 $ 7,075,178.08
$ 4,863,363.66 $ 4,895,316.23 $ 4,923,101.07 $ 4,947,261.80
 18 19 20
$ 7,169,720.07 $ 7,251,930.50 $ 7,323,417.82
$ 4,968,271.13 $ 4,986,540.11 $ 5,002,426.18