Evaluating IT Investments and Projects The purpose of this assignment is to evaluate technology projects using different metrics. Part 1: Evaluating IT

The purpose of this assignment is to evaluate technology projects using different metrics.

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:
Equipment135,000
Training7,000
Annual Support4,000
Savings:
Personnel6,000
Additional revenue4,500
ROI7.2%(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 APROJECT B
0-225000-20000
16000110000
2600028000
3600032000
460004500
560005500
NPV$ 245NPV$ (2,143)
IRR10%3%
Payback3.8years3.0years
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 Volume30,000
Old Volume35,000
Current Staffing Level20
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 Cost180,000
Inventory Reduction500,000
1% Reduction in Inventory Damage per Quarter20,000
Reduction in Borrowing Costs @ 5%25,000
TOTAL Annual Savings45,000
Payback4years
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 Team20
Weeks Required for Change7per FTE
Total Time Investment140
Work Weeks per Year44
Savings in Future Development Times10%
Return on Time Spent132man-weeks
How would you explain the result to GOAL Co’s management team?
Response:

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