work or an industry in which you are interested. What is the project? Describe and provide an approximate value of the initial cash flow,approximate value of the annual cash flows an estimation of the life of the project, as well as the exit costs.
A roofing contractor that operates locally, incurs capital expenditures in order to establish a new enterprise resource planning ("ERP") system. The system requires capital expenditures of $4.0 million in the first year, with a useful life of 20 years and no salvage value at the end of its lifetime. The system allows for the company to consolidate its back office staff across its multiple locations and centralize accounting and payroll processes.Which allows the company to save approximately $400k annually in cost savings through by eliminating unnecessary back office headcount at regional and local offices. As part of the exit at the end of 20 years, the company will have to invest in a new and more updated ERP system. Which may provide additional cost saving opportunities due to a greater scope of processes that can be centralized.
Mar 19th, 2015
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