Question

Instructions

• You must upload two files. An Excel file with your calculations and a Word File with the summary of your answers. Please use image captures to show the summary within the Word document. Under supplemental materials for week 1, there is a video of a cropping tool that can be used for capturing specific sections of your screen.

Problem 1

Implementing an e-commerce website has a projected net economic benefit of $ 40,000/year during the next five years. The recurring costs of this project are $ 10,000/year, and the initial cost of implementing the website is $ 50,000. Assuming that 10 percent is the estimated discount rate, do the following:

1. Calculate the net present value of these costs and benefits
2. Calculate the overall return on investment
3. Perform a break-even analysis and estimate when the actual break-even occurs
4. Generate a graphical representation in the case that the project breaks even

Answer 1

Annual return is equals to overall return divided by 5.

Breakeven Analysis 80 $68.72 60 $45.10 40 $2461 20 82.07 20 S-22.73 -40 S-50.00 -60 -Year-Net Present value

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