Commonly used cost benefit analysis techniques

Assignment Help Management Theories

Reference no: EM133316205

Question: To assist with a cost benefit analysis - the business owner is expecting a one-time productivity improvement of $5000 in the first month after installation due to productivity and then over the next three years and monthly benefit of $200 due to improved availability of equipment. After that period, it is expected that the net benefits would be zero and at the end of the contract, this equipment replaced with a onetime benefit of $10,000.

The time period is a five-year contract for support. The equipment will be purchased in the first month and the work would proceed starting month 2 at a rate of 40 hours per week. Maintenance costs would begin the month after the work has been completed. Which vendor should be utilized based on the financial analysis - use the three commonly used cost benefit analysis techniques? Show your work and state any assumptions that you think are needed and why they are needed.

Finally, you have discovered that that hours estimated by vendor A may be a problem when you have reviewed the contracts - Vendor A could be as high as 800 hours. Does this change your recommendation/ Why or why not?

Reference no: EM133316205

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