Evaluating IT Investments and Projects
The purpose of this assignment is to evaluate technology projects using different metrics.
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Part 1: Evaluating IT Investments and Projects Excel Spreadsheet
Complete the "Evaluating IT Investments and Projects" spreadsheet for this portion of the assignment. Be sure to include a thorough response to all questions.
Part 2: Presentation to Management
Create a PowerPoint presentation to management (6 or 7 slides, not including title and reference slides) summarizing your responses from Part 1. Ensure that each content slide summarizes one category from the "Evaluating IT Investments and Projects" spreadsheet.
General Requirements
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
You are not required to submit this assignment to LopesWrite.
Topic 5
| Topic 5 | ||||||
| Evaluating IT Investments and Projects | ||||||
| Simple ROI | ||||||
| Company XYZ is investing in new technology, resulting in the following costs, savings and revenue: | ||||||
| Costs: | ||||||
| Equipment | 135,000 | |||||
| Training | 7,000 | |||||
| Annual Support | 4,000 | |||||
| Savings: | ||||||
| Personnel | 6,000 | |||||
| Additional revenue | 4,500 | |||||
| ROI | 7.2% | (savings + income) / cost | ||||
| Do you have enough information to recommend this project? Why or why not? What advantages / disadvantages exist with using ROI? | ||||||
| Response: | ||||||
| NPV, IRR, Payback | ||||||
| You are comparing 2 projects with the following cash flows. Which would you recommend, based upon NPV with a 10% discount rate? | ||||||
| PROJECT A | PROJECT B | |||||
| 0 | -22500 | 0 | -20000 | |||
| 1 | 6000 | 1 | 10000 | |||
| 2 | 6000 | 2 | 8000 | |||
| 3 | 6000 | 3 | 2000 | |||
| 4 | 6000 | 4 | 500 | |||
| 5 | 6000 | 5 | 500 | |||
| NPV | $ 245 | NPV | $ (2,143) | |||
| IRR | 10% | 3% | ||||
| Payback | 3.8 | years | 3.0 | years | ||
| Which project would you recommend and why? Describe advantages / disadvantages of each of the valuation techiniques in the example. | ||||||
| Response: | ||||||
| Cost / Benefit | ||||||
| ABC Co is considering a project that will result in the following costs and potential productiivity improvements: | ||||||
| New Volume | 30,000 | |||||
| Old Volume | 35,000 | |||||
| Current Staffing Level | 20 | |||||
| Staff Savings | (3) | |||||
| Average Personnel Cost per FTE | $ 30,000 | |||||
| Interpret the result of a staff savings of 3 and convert to a financial figure. | ||||||
| Response: | ||||||
| GOAL Co is considering a new inventory forecasting system that will result in the following costs and inventory savings: | ||||||
| System Cost | 180,000 | |||||
| Inventory Reduction | 500,000 | |||||
| 1% Reduction in Inventory Damage per Quarter | 20,000 | |||||
| Reduction in Borrowing Costs @ 5% | 25,000 | |||||
| TOTAL Annual Savings | 45,000 | |||||
| Payback | 4 | years | ||||
| Explain the rationalization for the numbers used and approving this investment. | ||||||
| Response: | ||||||
| The IT team at GOAL Co is developing new systems to improve productivity, with the following expected return on time invested: | ||||||
| FTE on Team | 20 | |||||
| Weeks Required for Change | 7 | per FTE | ||||
| Total Time Investment | 140 | |||||
| Work Weeks per Year | 44 | |||||
| Savings in Future Development Times | 10% | |||||
| Return on Time Spent | 132 | man-weeks | ||||
| How would you explain the result to GOAL Co's management team? | ||||||
| Response: | ||||||
