Assignment:
Uber's management would like to analyze the return on its investment in its employee training and skills tracking system.
The system runs on the human resources specialists' PCs using PC database software. Because the entire corporate administrative staff recently received new desktop PC systems with database and other productivity software, there are no additional hardware and software purchase costs.
The main costs include the initial cost of designing and implementing the database (business staff cost of $9,000; information systems staff cost of $35,000), gathering and adding employee skills and training data to the database ($7,500 initial data conversion cost plus $3,000 annual data entry costs), and ongoing maintenance and support ($6,500 annually).
Human resources staff members believe the new application could save each of them two hours of work per week. (Their annual salaries are $57,000 and $62,000 each.) The company would also save about $18,000 annually in employee recruiting costs because it would be able to fill many vacant positions with existing employees, thereby reducing its costs for recruiting outside the company. The system would not be installed until the end of 2017 and would return benefits from 2018.
Assignment
Prepare a spreadsheet for management analyzing the return on the investment for this system over a 5-year period using the following capital budgeting models:
o ARR, IRR, NPV
o Return on investment (ROI)
o Payback Method
Assume a 5% interest rate for your net present value calculations.
You need to turn in a Spreadsheet that shows the calculations for each capital budgeting model.
Spreadsheet:
https://docs.google.com/spreadsheets/d/10ZC2103pdyvL9VAPJBgGlT2J59L9F8dYFrw-w29A3y0/edit?usp=sharing