COST BENEFIT ANALYSIS

A. Development Cost

Hardware Development Cost

Quantity Item Unit Price Price

1 Unit CPU Existing Existing

1 Unit Monitor Existing Existing

1 Unit Printer Existing Existing

1 Unit AVR Existing Existing

(Automatic Voltage Regulator)

Total Hardware Development Cost P 0.00

Software Development Cost

Description Price

System Analyst P 15,000

System Programmer P 12,000

Total Software Development Cost P 27,000

Computation on Development Cost

Hardware Development Cost Existing

Software Development Cost P 27,000

Total Development Cost P 27,000

B. Present Annual Operating Cost

I. Present Supplies Cost

Quantity Description Unit Cost Total

Cost

35 Reams Bond paper (long) P 157.00 P

5,495.00

35 Reams Bond paper (short) P 127.00 P

4,445.00

50 Pcs Brown envelope (long) P 2.75

P 137.50

50 pcs Brown envelope (short) P 1.75

P 87.50

50 pcs Folder (long) P 2.50

P 125.00

50 pcs Folder (short) P 2.00

P 100.00

12 bottles Correction fluid P 17.00 P 204.00

10 boxes Carbon paper (long) P 665.00 P

6,650.00

10 boxes Small paper clips P 23.00 / box P

230.00

30 pcs Fastener P 1.00

P 30.00

20 pcs Ballpen P 4.75

P 95.00

20 pcs Pencil P 4.75

P 95.00

1 pc Stapler P 75.00 P
75.00

15 boxes Staple wire P 20.00 P 300.00

3 pc Calculator P 195.00 P 585.00

 10 pcs Office Marker P 34.75
P 347.50

5 bottles Marker ink P 49.75 P 248.75

6 pcs Printer ink P 1,200 P 7,200.00

Total Present Supplies Cost P

26,587.75

C. Present Electric Consumption

1 CPU 200 watts

1 Monitor 80 watts

1 Printer 80 watts

Total Watts Consumptions 360 watts

Computation of Present Annual Electric Consumption

360 watts x 8 hours / day = 2880 watts / day

2880 watts / day x 1 kw / 1000 watts = 2.88 kw / day

2.88 kw / day x 30 days / month = 86.4 kw / month

86.4 kw / month x 12 months / year = 1036.8 kw / year

1036.8 kw / year x P 5.39 / kw = P 5588.35 / year

Total Annual Electric Consumption P 5,588.35

Total Present Supplies Cost P 26,587.75

Total Present Annual Electric Consumption P 5,588.35

Total Present Annual Operating Cost P 32,176.10

D. Proposed Annual Operating Cost

I. Proposed Supplies Cost

Quantity Description Unit Cost Total Cost

6 Reams Bond paper (long) P 164.85 P

989.10

6 Reams Bond paper (short) P 133.35 P

800.10

12 Pcs Brown envelope (long) P 2.89

P 34.68

12 pcs Brown envelope (short) P 1.84

P 22.08

12 pcs Folder (long) P 2.63

P 31.56

12 pcs Folder (short) P 2.10

P 25.20

5 bottles Correction fluid P 17.85 P 89.25

2 boxes Small paper clips P 24.15 / box P

48.30

15 pcs Fastener P 1.05

P 15.75

20 pcs Ballpen P 4.99

P 99.80

20 pcs Pencil P 4.99

P 99.80

1 pc Stapler P 75.00 P
78.75

8 boxes Staple wire P 21.00 P 168.00

5 pcs Office Marker P 36.49 P

182.45
 2 bottles Marker ink P 52.24 P 104.48

6 pcs Printer ink P 1,260 P 7,560.00

Total Present Supplies Cost P

10,349.30

II. Proposed Web Services Cost

Type of Service Price Annual Expense

Internet Service Provider (Globe) Existing Existing

Web Hosting (Netfirms) P 250.00 / month P 3,000.00

Web Domain Name (GoDaddy) P 500 / year P

500.00

Total Web Services Cost P

3,500.00

E. Proposed Electric Consumption

1 CPU 200 watts

1 Monitor 80 watts

1 Printer 80 watts

Total Watts Consumptions 360 watts

Computation of Present Annual Electric Consumption

360 watts x 8 hours / day = 2880 watts / day

2880 watts / day x 1 kw / 1000 watts = 2.88 kw / day

2.88 kw / day x 30 days / month = 86.4 kw / month

 86.4 kw / month x 12 months / year = 1036.8 kw / year

1036.8 kw / year x P 5.66 / kw = P 5,868.29 / year

Total Annual Electric Consumption P 5,868.29

Total Proposed Annual Supplies P 10,349.30

Total Proposed Web Services Cost P 3,500.00

Total Proposed Electric Consumption P 5,868.29

Total Proposed Annual Operating Cost P 19,717.59

F. Annual Cost Savings

Total Present Annual Operating Cost P 32,176.10

Less: Total Proposed Annual Operating Cost P 19,717.59

Total Annual Cost Savings P 12,458.51

Present Value Method (Yardon’s Formula)

P = F / ( 1 + i )n

F = P / ( 1 + i )n

Where:

P = Present value of investment (total cost savings)

F = Future value of the investment

i = Interest rate per compounding year (12%)

n = Number of years

1 = Constant figure for 1 whole year

Computation:
Year 1 Year 4

F = P * ( 1 + i )n F = P * ( 1 + i )n
= 12,458.51 ( 1 + 0.12 )1 = 12,458.51 ( 1 +
0.12 )1
= 12,458.51 ( 1.12) = 12,458.51 ( 1.57)
= 13,953.53 = 19,559.86

Year 1 Year 5

F = P * ( 1 + i )n F = P * ( 1 + i )n
= 12,458.51 ( 1 + 0.12 )1 = 12,458.51 ( 1 +
0.12 )1
= 12,458.51 ( 1.25) = 12,458.51 ( 1.76)
= 15,573.14 = 21,926.98

Year 3

F = P * ( 1 + i )n
= 12,458.51 ( 1 + 0.12 )1
= 12,458.51 ( 1.40)
= 17,441.91

Years Savings Interest Present Cumulative Present

1 12,458.51 1.12 Value
13,953.53 Value
13,953.53
2 12,458.51 1.25 15,573.14 28,031.65
3 12,458.51 1.40 17,441.91 29,900.42
4 12,458.51 1.57 19,559.86 32,018.37
5 12,458.51 1.76 21,926.98 34,385.49

Total Development Cost = P 27,000.00

Less: Cumulative Present Value (Year 1) = P 13,953.53

= P 13,046.47

Divided by: Present Value (Year 2) = P 15,573.14

Expected Period of Coverage = 0.84

 = 84%

Add: 1 Year = 1.84

Payback Period = 1.84 years

Therefore, the actual payback period is 1.84 years.

Computation on Converting Payback Period to Number of

Years / Months / Days

1.84 years subtract 1.00 = 0.84

0.84 multiplied by 365 days / year = 307 days

307 days divided by 30 days / month = 11

months

Computed Expected Payback Period = 1 Year

and 11 months

NET PRESENT VALUE – Under this method, all cash inflows or outflows related
to the Investment project are discounted at a minimum acceptable Rate of
return which in most cases, is the final cost of capital.

Net Present Value = Cumulative Present Value – Total

Development Cost

= P 28,031.65 – P 27,000

Net Present Value = P 1,031.65

Summary:

Total Hardware Development Cost P 0.00

Total Software Development Cost P 27,000.00

 Total Development Cost P 27,000.00

Total Present Annual Supplies Cost P 26,587.75

Total Proposed Annual Supplies Cost P

10,349.30

Total Present Electric Consumption P 5,588.35

Total Proposed Electric Consumption P 5,868.29

Total Proposed Web Services Cost P 3,500.00

Total Present Annual Operating Cost P

32,176.10

Total Proposed Annual Operating Cost P 19,717.59

Total Annual Cost Savings P 12,458.51