A company plans to upgrade their SCM system. The estimated one-time upgrade costs are $20,000 . To sponsor the projects, the oversight committee requires the upgraded project to pay for itself within 3 years of completion and to have a ROI greater than 30%. On-going operational costs for the project and the estimated annual benefits are shown in the table below. Assume that discount rate is 0.08 and calculate the following:
NPV (Net Present Value) for the project.
3-year return on investment. For calculating ROI (Return of Investment), take into account both development and operational costs.