This is a Collaborative Learning Community (CLC) assignment.
The purpose of this assignment is to gain a better understanding of capital budgeting and discounted cash flow models.
Select one out of two possible IT-based problems for a fictitious company:
Assessment of a new enterprise resource planning (ERP) software system.
Assessment of the costs of a major transition to cloud computing and security upgrades.
CLC groups will work on one problem. The final assignment will include both a narrative part in a Word document (1,200-1,400 words) and Excel spreadsheet with the analysis of the proposals from the two vendors.
Your project should include the following items:
A description of a problem within the organization.
A suggested solution to that problem.
Identification of two companies that could serve as potential vendors for the proposed solutions.
Total expected real-world costs of the group’s proposed solution as models cash outflows.
Savings expected as a result of implementing the group’s proposed solutions as future cash inflows.
Use a required rate of return (hurdle rate) of 8% for the discounting of the future cash flows.
An Excel spreadsheet that analyzes the proposals from two vendors using the net present value (NPV) discounted cash flow model. Use Excel’s =NPV( ) -costs function to determine which proposal is more financially acceptable. The final part of your assignment will include your justification of why your group’s analysis using the NPV method suggests selecting one proposal over the other.
A minimum of three potential objections the members of the senior management team might raise when the group presents its proposal during the company’s budget meetings, as well as a defense of your position in light of the objections.
Submit both the Word document narrative and the Excel spreadsheet. APA formatting does not apply to Excel spreadsheets. For assistance in uploading Word and Excel files to the dropbox, refer to the “LMS Submitting Your Assignments,” provided in the study materials.
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.