Feasibility

ECONOMIC FEASIBILITY

FEASIBILITY STUDIES

Year | 1 | 2 | 3 | 4 | 5 |

Benefit : | RM | RM | RM | RM | RM |

Reduce staff salary | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |

Reduce the fee for do the accounting report | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 |

Improve the security of supplier’s details | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |

Save the management time | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |

Total benefits | 210,000 | 210,000 | 210,000 | 210,000 | 210,000 |

Discount Rate (12%) | 0.8929 | 0.7972 | 0.7118 | 0.6355 | 0.5474 |

PV of Benefit | 187,509 | 167,412 | 149,478 | 133,455 | 114,954 |

Cost | | | | | |

One-time Costs: | | | | | |

hardware-replacement & upgrade computers | 40,000 | | | | |

software- update version of software | 20,000 | | | | |

initial system design | 20,000 | | | | |

installation | 10,000 | | | | |

training staff | 25,000 | | | | |

legal fees | 5,000 | | | | |

Total one-time cost | 120,000 | | | | |

Recurring Costs | | | | | |

Renew software license(annual) | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 |

system maintenance | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 |

labor cost | 55,000 | 55,000 | 55,000 | 55,000 | 55,000 |

overhead | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 |

Total Recurring Cost | 90,000 | 90,000 | 90,000 | 90,000 | 90,000 |

Total cost | 210,000 | 90,000 | 90,000 | 90,000 | 90,000 |

Discount Rate (12%) | 0.8929 | 0.7972 | 0.7118 | 0.6355 | 0.5474 |

PV of total cost | 187,509 | 71,748 | 64,062 | 57,195 | 49,266 |

Benefit - recurring cost | 0 | 95,664 | 85,416 | 76,260 | 65,688 |

ROI | 0% | 133.33% | 133.33% | 133.33% | 133.33% |

Appendix

Since our company want to create new purchasing system,we conduct an economic test based on benefit we will gain and cost incurred in implementing new purchasing system.Based on the appendix given, we can clearly know...