8/18/2019 B K Case Answers

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1. What is the return on investment for the proposed web portal project?

 The IRR is 46% for this project

. !ow much value is "enerated from cost savin"s associated with the

project?

 The avera"e cost for processin" an order is currentl# $.&'( with the

implementation of the project this cost will be reduced to $4.' at the

end of )ear &. *onsiderin" the transactions for each #ear and the reduced

processin" cost.

 )ear 1 + 1,&'-.&/0.4 + 1, )ear + '''4-.&/,.'0 + 404' )ear 2 + 1,0,-.&/&.02 + ,&0 )ear 4 + 21'0-.&/&.6' + '11 )ear & + 2&,1-.&/4.' + 146

3or a time horion of 3ive #ears the cost savin"s will be $26(60,

2. !ow much value lies in the improvement of revenues?

5"ain considerin" a time horion of & #ears for revenue increases because

of the project

 )ear 1 + 4642/24'' + 142 )ear + &61/24'' + 1 )ear 2 + 640,/24'' + 2'0,

 )ear 4 + ,2/24'' + 202 )ear & + ,006/24'' + 4406

 The increased revenue from this project over & #ears will be $14(0('''