Business Case Analysis of an ERP System ERP Systems – Bradford Carter Electronics, a distributor of semiconductors and electrical components, is considering implementing an ERP system. This project will represent a huge investment for Carter and thus a business case must be developed in order to gain approval for the project. With the help of knowledgeable process owners, a group of individuals who will likely be on the project team, and IT staff, the managerial accountants put together the following total cost of ownership and benefits over a 5 year horizon (the time estimated that the system will be used until a major upgrade). Carter’s cost of capital is 6%
Required: 1. Based on the information provided, calculate a NPV of this project using 6% cost of capital.
2. Calculate a Return on Investment (ROI).
3. Calculate the Payback Period for the ERP system
4. Is this a good investment based on above calculations?