Prepare a business report for management analyzing the return onthe investment for this system over a five-year period using thefollowing capital budgeting models: net present value, return oninvestment (ROI), internal rate of return (IRR), and paybackmethod. Assume a 5 percent interest rate for your net present valuecalculations. Use spreadsheet software for your calculations.
Dirt Bikesâs management would like to analyze the return on itsinvestment in its
employee training and skills tracking system described inChapter 13. The system runs on
the human resources specialistsâ PCs using PC database software.Because the entire
corporate administrative staff recently received new desktop PCsystems with database
and other productivity software, there are no additionalhardware and software purchase
costs. The main costs include the initial cost of designing andimplementing the database
(business staff cost of $5,000; information systems staff costof $15,000), gathering and
adding employee skills and training data to the database ($5,500initial data conversion
cost plus $1,000 annual data entry costs), and ongoingmaintenance and support ($3,000
annually). Human resources staff members believe the newapplication could save each
of them two hours of work per week. (Their annual salaries are$37,000 and $42,000
each.) The company would also save about $11,000 annually inemployee recruiting costs
because it would be able to fill many vacant positions withexisting employees, thereby
reducing its costs for recruiting outside the company. Thesystem would not be installed
until the end of 2014 and would return benefits from 2015 to2019.number of hours 40 per week
Prepare a business report for management analyzing the return onthe investment for this system over a five-year period using thefollowing capital budgeting models: net present value, return oninvestment (ROI), internal rate of return (IRR), and paybackmethod. Assume a 5 percent interest rate for your net present valuecalculations. Use spreadsheet software for your calculations.
Dirt Bikesâs management would like to analyze the return on itsinvestment in its
employee training and skills tracking system described inChapter 13. The system runs on
the human resources specialistsâ PCs using PC database software.Because the entire
corporate administrative staff recently received new desktop PCsystems with database
and other productivity software, there are no additionalhardware and software purchase
costs. The main costs include the initial cost of designing andimplementing the database
(business staff cost of $5,000; information systems staff costof $15,000), gathering and
adding employee skills and training data to the database ($5,500initial data conversion
cost plus $1,000 annual data entry costs), and ongoingmaintenance and support ($3,000
annually). Human resources staff members believe the newapplication could save each
of them two hours of work per week. (Their annual salaries are$37,000 and $42,000
each.) The company would also save about $11,000 annually inemployee recruiting costs
because it would be able to fill many vacant positions withexisting employees, thereby
reducing its costs for recruiting outside the company. Thesystem would not be installed
until the end of 2014 and would return benefits from 2015 to2019.number of hours 40 per week
