Global Solution

Economic Feasibility Analysis

Year of  Project

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Total

Net Economic Benefite

$0

$85,000

$85,000

$85,000

$85,000

$85,000

Discount Rate (12%)

1.0000

0.8929

0.7972

0.7118

0.6355

0.5674

PV of Benefits

$0

$75,892

$67,761

$60,501

$54,018

$48,230

NPV of All BENEFITS

$0

$75,892

$143,653

$204,154

$258,172

$306,402

$306,402

On-Time COSTS

($75,000)

Recurring Costs

$0

($35,000)

($35,000)

($35,000)

($35,000)

($35,000)

Discount Rate (12%)

1.0000

0.8929

0.7972

0.7118

0.6355

0.5674

PV of Recurring Costs

$0

($31,251)

($27,902)

($24,913)

($22,243)

($19,861)

NPV of All COSTS

($75,000)

($106,251)

($134,153)

($159,066)

($181,309)

($201,170)

($201,170)

Overall NPV

$105,232

Overall ROI- (Overall NPV/NPV of All COSTS)

0.52

Break Even analysis

Yearly NPV Cash Flow

($75,000)

$44,641

$39,859

$35,588

$31,775

$28,369

Overall NPV Cash Flow

($75,000)

($30,359)

$9,500

$45,088

$76,863

$105,232

Project Break-even occurs between years 2 and 3

Use first years positive cash flow to calculate break-evan fraction- ((39859-9500)/39859)= 0.761

Actual break-even occurred at 2.4 years