Recently a proposal was submitted to senior management to make changes to the current design of the company’s most popular storage model, the LaCie Model B77, which accounted for 54% of the company’s total revenue of $31.5M in 2009. The proposed change is expected to bring about a 68% increase in input/output (I/O) speeds for the device from the current 312MB/sec transfer rate — though 21% of the proposed data rate increase will be lost to added overhead data management.
The LaCie Company has a project proposed for $1.7M, and if approved. The time table (start to finish) is proposed to be 1-year (365 calendar days) and will require a project team composed of the project manager (PM), 3 senior memory designers, 2 junior designers, two test engineers, a change control person, one part time scheduling person and one technical writer, who will work also as an administrative person for various project needs. There will also be a part time procurement and contracts person, dedicated at a 50% level.
Calculate the following:
Net Present Value calculation