You have been asked to calculate the Return on Investment (ROI) for a project wh
ID: 2535672 • Letter: Y
Question
You have been asked to calculate the Return on Investment (ROI) for a project whose development will be accomplished during a single calendar year with the go-live date of Jan 1st The project, to develop a new Web-based ordering and fulfillment system, has already been conceptualized, and the team has provided estimates and a partial resource plan. Labor Operating expenses in years 2 through 5 are projected to be $57,000 annually. Miscellaneous expenses in years 2 through 5 are projected to be $6,500 annually. The benefit is projected to be $225,000 the first year of operation, increasing 11% each year. Hardware cost that would be installed for development is $100,000. You’ll need to complete the resource plan, the 5 year planning sheet, and calculate a 5 year ROI. Please finish filling out these tables and answer the associated questions.
Development Team
Quantity
$/hour
Hours/each resource
Total Hours
Total Dollars
Program Director
1
95
500
Project Manager
1
95
1000
BA
1
95
750
Development Lead
1
80
1000
QA Lead
1
80
1000
Off-Shore Developers
6
25
750
Off-Shore QA
4
25
750
Total
Expense
Year 1
Year 2
Year 3
Year 4
Year 5
Labor
Hardware
Misc
Benefit
Year 1
Year 2
Year 3
Year 4
Year 5
Benefit
Question 1 [2 points]: What is the total labor cost of development?
Question 2 [2 points]: What is the total expense of this project projected to be for the first 5 year period?
Question 3 [2 points]: What is the total benefit projected to be for the first year?
Question 4 [2 points]: What is the total benefit projected to be for the first five years?
Question 5 [2 points]: Given ROI % = ((Benefit – Cost) / Cost)*100, what is the 5 year ROI for this project?
Question 6 [2 points]: If the company could just put the money to cover the project expenses in the bank (instead of doing this project) it could make a investment gain of 7% over this same 5 year period. Should the company invest in this project, or put the money in the bank? Why?
Question 7 [4 points]: Describe in your own words BRIEFLY why APO05 and APO06 are important to project funding selection based on ROI calculation.
Development Team
Quantity
$/hour
Hours/each resource
Total Hours
Total Dollars
Program Director
1
95
500
Project Manager
1
95
1000
BA
1
95
750
Development Lead
1
80
1000
QA Lead
1
80
1000
Off-Shore Developers
6
25
750
Off-Shore QA
4
25
750
Total
Explanation / Answer
1)
2)Notes:
Development Team Quantity $/hour Hours/each Resource Total Hours Total Dollars Program Director 1 95 500 500 47500 Product Manager 1 95 1000 1000 95000 BA 1 95 750 750 71250 Development Lead 1 80 1000 1000 80000 QA Lead 1 80 1000 1000 80000 Off shore Developers 6 25 750 4500 112500 Off shore QA 4 25 750 3000 75000 Total 561250 Expense year 1 year 2 year 3 year 4 year 5 Labor 561250 57000 57000 57000 57000 Hardware 20000 20000 20000 20000 20000 Miscellaneous Expense 0 6500 6500 6500 6500 Total Cost 581250 83500 83500 83500 83500 Benefit 225000 249750 277223 307717 341566 Benefit-Cost -356250 166250 193723 224217 258066 ROI% -61% 199% 232% 269% 309%Related Questions
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