Scribd
Upload
231 views2 pages

BT 13.4 C5 HTTTKT

The document analyzes whether a company should invest $100,000 in a new security solution. It shows that while there is an initial cost of $100,000, the solution is expected to reduce the risk of a $500,000 security issue from 10% to 0.4%, saving an estimated $30,000 annually. Over 5 years, the net benefit is $50,000 and the internal rate of return is 15%, so the investment has a positive net present value and should be undertaken.

Uploaded by

Ngọc Ngô Minh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
231 views2 pages

BT 13.4 C5 HTTTKT

The document analyzes whether a company should invest $100,000 in a new security solution. It shows that while there is an initial cost of $100,000, the solution is expected to reduce the risk of a $500,000 security issue from 10% to 0.4%, saving an estimated $30,000 annually. Over 5 years, the net benefit is $50,000 and the internal rate of return is 15%, so the investment has a positive net present value and should be undertaken.

Uploaded by

Ngọc Ngô Minh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Request: Should we invest $100,000 in the proposed security solution to reduce the ris

Answer:
Your name:

Year
0 1 2 3
Purchase cost (initial) $100,000
Annual fee $0 $0 $0 $0

Training costs $0 $0 $0 $0 $0

Savings due to efficiency $0 $0 $0 $0 $0

Reduction in threat:
Impact $500,000
Current risk 10.00%
Expected loss $50,000
New risk 400.00%
New expected loss $20,000

Benefit $30,000 annually $0 $30,000 $30,000 $30,000

Total cash outflows $100,000 $0 $0 $0


Total benefits $0 $30,000 $30,000 $30,000
Net benefits -$100,000 $30,000 $30,000 $30,000
Discount rate 10%
Discounted value -$100,000 $27,273 $24,793 $22,539
NPV $13,723.60
IRR 15%
solution to reduce the risk of an issue below 10%?

Total
4 5
$100,000
$0 $0 $0

$0 $0 $0

$0 $0 $0

$30,000 $30,000 $150,000

$0 $0 $100,000
$30,000 $30,000 $150,000
$30,000 $30,000 $50,000

$20,490 $18,628 $13,723

You might also like