Reference no: EM132695167

Problem 1: Analysis for a change project that is being considered reveals that it will cost $70,000 to establish (in year 0), and that the recurring costs for the next 3 years will be $25,000 (in years 1, 2 & 3). There will be no benefits in year 0, but there will be $96,000 worth of benefits each year in years 1 through to 3. Using the formula above, calculate the payback period and the ROI. What is your recommendation?

Years          Benefits                 Costs

0                $0                          $70,000

1                 $96,000                   $25,000

2                  $96,000                   $25,000

3                  $96,000             $25,000

TOTAL BENEFITS $288,000

TOTAL COSTS $140,000