1. Assignment 10 Prototype Assignment10 Schwab, Slide 1Copyright © 2003, Jim Schwab, University of Texas at Austin

2. Create the workbook for the assignment Assignment 10 Prototype, Slide 2Copyright © 2004, Jim Schwab, University of Texas at Austin Open a new workbook and insert worksheets into it until there are five worksheets. Change the names of the worksheets to: Benefit-cost Ratio, Benefits, Benefit 1 Discussion, Benefit 2 Discussion, and Benefit 3 Discussion. Open a new workbook and insert worksheets into it until there are five worksheets. Change the names of the worksheets to: Benefit-cost Ratio, Benefits, Benefit 1 Discussion, Benefit 2 Discussion, and Benefit 3 Discussion. Save the workbook under the name for this assignment, embedding your name in the title. For example, I would name my workbook: Assignment10_Schwab.xls.

3. Cost of providing agency services Assignment 10 Prototype, Slide 3Copyright © 2004, Jim Schwab, University of Texas at Austin First, navigate to the Benefit-cost Ratio worksheet. Second, enter the label Costs in cell A1, Benefits in cell A2, and Benefit-cost Ratio in cell A4. Third, enter the cost for the program from the AgencyBudget.xls workbook completed for a previous assignment.

4. Benefit 1: earnings differential-successful completions Assignment 10 Prototype, Slide 4Copyright © 2004, Jim Schwab, University of Texas at Austin First, navigate to the Benefit 1 Discussion worksheet and add a text box that fills the visible worksheet. Second, enter the description of the first benefit: how it was defined, what is dollar value was, and to whom did it apply.

5. Entering benefit one data - 1 Assignment 10 Prototype, Slide 5Copyright © 2004, Jim Schwab, University of Texas at Austin First, navigate to the Benefits worksheet and type the column headings as shown. Second, in rows 2 through 51 of column A, enter the series of time periods from 1 to 50.

6. Entering benefit one data - 2 Assignment 10 Prototype, Slide 6Copyright © 2004, Jim Schwab, University of Texas at Austin Third, in cells B2 through B11, enter 0 benefits for the earnings for 10 years until the average child is employed. Fourth, in cells B12 through B51, enter the aggregate earnings differential of $5,000 for the 32 successful completions, for a total of $160,000 each year.

7. Benefit 2: alternative placement costs avoided Assignment 10 Prototype, Slide 7Copyright © 2004, Jim Schwab, University of Texas at Austin First, navigate to the Benefit 2 Discussion worksheet and add a text box that fills the visible worksheet. Second, enter the description of the second benefit: how it was defined, what is dollar value was, and to whom did it apply.

8. Entering benefit two data Assignment 10 Prototype, Slide 8Copyright © 2004, Jim Schwab, University of Texas at Austin First, in row 2 of column C, enter 0 as the savings for the first year Second, in cells C3 through C4, enter 640,000 as the costs of more expensive care that was avoided by the success of the 32 placements at the hypothetical home. Third, in cells C5 through C51, enter 0 since there were no additional savings after the children turned 18.

9. Benefit 3: community savings-reduced crimes Assignment 10 Prototype, Slide 9Copyright © 2004, Jim Schwab, University of Texas at Austin First, navigate to the Benefit 3 Discussion worksheet and add a text box that fills the visible worksheet. Second, enter the description of the third benefit: how it was defined, what is dollar value was, and to whom did it apply.

10. Entering benefit three data Assignment 10 Prototype, Slide 10Copyright © 2004, Jim Schwab, University of Texas at Austin First, in rows 2 through 11 of column D, enter $8,000 as the savings per year for property crimes not committed. Second, in cells D12 through D51, since incarcerated prisoners do not continue to commit property crimes.

11. Sum the benefits Assignment 10 Prototype, Slide 11Copyright © 2004, Jim Schwab, University of Texas at Austin First, in cell E2, enter the formula =B2+C2+D2 to sum the three categories of benefits. Second, drag fill the formula to cells E3 through E51 to sum the benefits for each year.

12. Use NPV function to calculate value of benefits Assignment 10 Prototype, Slide 12Copyright © 2004, Jim Schwab, University of Texas at Austin First, select the cell in which we want Excel to return the present value of the future benefits, cell B2 on the Benefit-cost ratio worksheet. Second, select the Function command from the Insert menu.

13. Locate the NPV function Assignment 10 Prototype, Slide 13Copyright © 2004, Jim Schwab, University of Texas at Austin We will search for the NPV function. First, type NPV in the Search for text box, and click on the Go button. The NPV function name will appear in the Select a function list box. Click on the OK button access the dialog box where the function arguments are entered.

14. The arguments to the NPV function Assignment 10 Prototype, Slide 14Copyright © 2004, Jim Schwab, University of Texas at Austin The first argument to the NPV function is the discount rate, which we will enter directly as 5%. The second argument to the NPV function is the cells containing the projected benefits attributed to placement at the hypothetical home. With the arguments entered, click on the OK button.

15. The benefits attributed to the program Assignment 10 Prototype, Slide 15Copyright © 2004, Jim Schwab, University of Texas at Austin The NPV function returns the present value of the benefits attributed to the program, $2,880,599.

16. The benefit-cost ratio Assignment 10 Prototype, Slide 16Copyright © 2004, Jim Schwab, University of Texas at Austin The benefit-cost ratio is computed by dividing the benefits by the costs. Enter the formula =B2/B1 into cell B4. The benefit-cost ratio of 1.65 indicates that the future benefits for one year of services to clients clearly outweighs the costs.