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Question A company is trying to project if it needs to undertake a new project for replacement of a CRM system. The current o

Hi, Please help!! I'm looking for an EXCEL SHEET answer shown with excel formulas. PLease show all of your work. Thank you so much.

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Answer #1

Net Present Value = Present value of cash benefits - Present Value of Cash outflow

Calculation of Net Present Value

Year 1 2 3 4 5
Old Operating cost 850000 935000 1028500 1131350 1244485
New Operating cost 250000 250000 250000 250000 250000
Cost Benefit 600000 685000 778500 881350 994485
Discounting Factor @ 12% 0.892857 0.797194 0.71178 0.635518 0.567427
Present Value of Benefit 535714.3 546077.8 554120.9 560113.9 564297.5
Total Present Value 2760324
Less: Total Cost of new system 1336000
Net Present Value 1424324

Net Present Value = Present value of cash benefits - Present Value of Cash outflow.

Answer: The Company should engage in New CRM product development because the NPV is positive.

Note: Excel Formulas

в 850000 250000 =B2*1.1 250000 =C2*1.1 250000 =D2*1.1 250000 5 =E2*1.1 250000 1 Year 2 Old Operating cost 3 New Operating cos

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