Provide The ROI Ratio For Both Spreadsheets Use And Submit

Provide The Roi Ratio For Both Spreadsheetsuse And Submit The Two Spre

Provide the ROI ratio for both spreadsheets use and submit the two spreadsheets attached to determine the TCO and ROI for in-house and on-line (NOTE there are two tabs on each spreadsheet). Provide a line chart showing C-Cost & C-Benefits for both spreadsheets - 5pts. Use Salary.com to find salary ranges for your personnel, calculate the hourly rate, and add 50% to the rate for the burdened costs. Burdened costs include overhead such as vacation time, insurance, benefits, workspace, and equipment (desk, chair, computer, etc). Your Benefits for each year are: Year 1 - $0, Year 2 - $600,000, Year 3 - $1,274,000, Year 4 - $3,127,000 (Spreadsheets Attached).

Paper For Above instruction

The task at hand involves analyzing two provided spreadsheets—each representing different approaches to project implementation: in-house and online. The analysis focuses on calculating and comparing the Return on Investment (ROI) ratios, Total Cost of Ownership (TCO), and visualizing the comparative benefits and costs over a four-year period. This comprehensive evaluation aims to inform decision-making about the most cost-effective and beneficial approach for the organization.

Introduction

Effective financial analysis is vital for organizations to determine the most beneficial and cost-effective strategies when adopting new projects or processes. The ROI ratio and TCO are fundamental metrics used in such evaluations. The provided spreadsheets contain data needed to assess the financial viability of implementing a project either in-house or online. Additionally, calculating burdened personnel costs, including salary and overhead, provides a realistic view of the expenses associated with each approach.

Calculating ROI Ratios and TCO

The first step involves analyzing the two spreadsheets, each with two tabs, to extract costs and benefits associated with in-house and online implementations. The ROI ratio is calculated by dividing the net benefits (total benefits minus total costs) by the total costs, expressed as a percentage. TCO encompasses all direct and indirect costs involved in implementing and maintaining each approach, including personnel, infrastructure, and overhead costs.

For accurate calculation, salary data is sourced from Salary.com, considering current salary ranges for relevant personnel. The hourly wage rate is computed by dividing annual salary by the total annual working hours, typically 2,080 hours for full-time employment. A 50% burden rate is then added to cover overhead costs, including benefits, insurance, workspace, and equipment.

Calculating Burdened Costs

The calculation of burdened costs is essential for an accurate assessment of personnel expenses. If, for example, a salary of $80,000 is obtained from Salary.com, the hourly rate is $38.46 ($80,000 / 2,080 hours). Adding 50% overhead results in a burdened hourly rate of $57.69. This method is repeated for all involved personnel, ensuring the cost estimates reflect real organizational expenses.

Benefits over Four Years

The benefits accrued over four years are provided, with a clear escalation each year: Year 1 – $0; Year 2 – $600,000; Year 3 – $1,274,000; Year 4 – $3,127,000. These benefits include increased productivity, savings, or intangible benefits turned into monetary values, which enhance the ROI calculations.

Creating the Line Chart

A line chart depicting Cost (C-Cost) and Benefits (C-Benefits) over the four-year period offers a visual comparison between the in-house and online approaches. This visualization clearly illustrates how costs and benefits evolve, highlighting which approach provides better long-term value.

Analysis and Results

After deriving the TCO and ROI figures from the spreadsheets, these metrics will be analyzed to determine which approach yields higher ROI, indicating better investment value. A higher ROI ratio signifies a more efficient use of resources, while the TCO analysis helps identify overall cost-effectiveness.

Conclusion

Accurate financial analysis combining ROI, TCO, and visual data representation informs strategic decision-making. By thoroughly evaluating both approaches using the provided data and calculations, organizations can select the option that maximizes benefits while minimizing costs, aligning with organizational goals and financial sustainability.

References

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• Salary.com. (2023). Salary Ranges & Burden Rates. https://www.salary.com
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