FEASIBILITY STUDY example

ECONOMIC FEASIBILITY ANALYSIS
0 1 2 3 4 5 TOTALS
Build New System $0.00 $85,000.00 $85,000.00 $85,000.00 $85,000.00 $85,000.00
Discount rate (12 %) 1.000 0.8929 0.7972 0.7118 0.6355 0.5674
PV of Benefits $0.00 $75,893.00 $67,761.00 $60,501.00 $54,019.00 $48,231.00

NPV of Building New System $0.00 $44,643.00 $84,503.00 $120,092.00 $151,867.00 $180,239.00 $180,239.00

One-Time COSTS ($75,000)

Continue Maintaining Existing System
Recurring Costs ($35,000) ($35,000) ($35,000) ($35,000) ($35,000)
Discount rate (12 %) 1.000 0.8529 0.7972 0.7118 0.6355 0.5674
PV of Recurring Costs $0.00 ($31,250) ($27,902) ($24,912) ($22,243) ($19,860)

NPV of all COSTS ($42,500) ($67,946) ($90,666) ($110,952) ($129,064) ($145,236) ($201,167)


Overall NPV $105,239.00

ROI = Overall NPV / NPV of Costs 52.31%

Year of Project 0 1 2 3 4
Break-even Analysis
Yearly NPV Cash Flow ($75,000) $44,643 $39,860.00 $35,589.00 $31,776.00 $28,371.00
Overall NPV Cash Flow ($75,000) ($30,367) $9,503.00 $45,092.00 $76,867.00 $106,239.00


Break Even Ratio = (yearly NPV cash flow - general NPV cash flow) / yearly NPV cash flow
Break Even occurs in 1.8 years

0 1 2 3 4 5
Beneficios $0.00 $44,643.00 $84,503.00 $120,092.00 $151,867.00 $180,239.00
Costos $42,500 $67,946 $90,666 $110,952 $129,064 $145,236