What is the return on investment on this upgrade project

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Reference no: EM13905173

As a large construction company IT manager you have been asked to decide if the company should invest in an upgrade to the servers that support your engineering department. If you stick with the current system, annual energy costs are $75,000, annual maintenance costs are $200,000, and the annual software licenses are $25,000 per year. For the upgrade, the investment required is $490,000 and the company’s cost of capital is 7%. The investment would cut all of your annual costs by 50% for 5 years. Include a cash flow table from your excel spreadsheet, include investments, annual costs, cash flow, and cumulative cash flow throughout the duration of 5 years. Graph your annual cash flow as a bar graph and cumulative cash flow as a line graph for this upgrade project. What is the return on investment on this upgrade project and what is the payback period? Should you do it?

Reference no: EM13905173

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