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Assume you are in charge of launching a new website for a client of your choice....

Assume you are in charge of launching a new website for a client of your choice. Present a short overview of the mission of the organization first. Let us assume that the one‑time costs of implementing the website are $40,000 and the recurring costs are $9,000 per year. Assume the benefits are $50,000 per year.

Provide the answers to the following questions:

(Make sure to show the details for the breakdown of the response and draw a direct connection to readings in support).

  1. What costs would you need to account for?
  2. Identify the list of expected costs and benefits with values for the project (consider on time and recurring costs too)
  3. Based on the costs you identified, create the net present value (NPV) and return on investment (ROI). Include a breakeven analysis assuming a 10 percent discount rate and a five-year time horizon.
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Answer #1

Cost need to be accounted for Year Initial cost Recurring cost Total Cost to be recognised Workings 40,000 9,000 9,000 9,000 9,000 9,000 49,000 9,000 9,000 9,000 9,000 49,000 (40,000+9,000) 58,000 (49,000+9,000) 67,000 (58,000+9,000) 76,000 (67,000+9,000) 85,000 (76,000+9,000) 85,000 2 4 Total costNet present value Calculation of Expected benefits considering time value Calculation of Present value of cash inflows Year Cash Inflows Present value factorP V of inflows 50,000 50,000 50,000 50,000 50,000 0.9091 0.8264 0.7513 0.683 0.6209 45,455 41,320 37,565 34,150 31,045 1,89,535 4 Total Calculation of Expected cost considering time value Calculation of Present value of cash outflows Year Cash Outflows Present value factor P V of Outflows 49,000 9,000 9,000 9,000 9,000 0.9091 0.8264 0.7513 0.683 0.6209 44,546 7,438 6,762 6,147 5,588 70,480 4 Total NPV PV of cash inflows - P V cash outflows -1,89,535- 70480 - 1,19,055 Calculation of return on investment Return on investment Net Profit or Returns from investments Total Investments - 1,89,535/70,480 -2.69 (OR) 268.92% Break even analysis To be Break even the company should recover the total cost incurred on the project Break even indicates total cost incurred will be equal to amount recovered Here, Total cost equal to 70,480 To be Break even the company should recover 70,480 in Present value

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