MSP

Executive Summary: MSP Service Initiative

Financial Metrics

Value (USD)

Comments

Initial Setup Costs

$500,000

Covering infrastructure, software licensing, and initial marketing efforts.

Annual Revenue Projections

$20,000,000

From 2,000 subscriptions with subscription and usage-based fees.

Present Value of Expected Benefits

$86,090,000

Calculated over 5 years at a 5% discount rate, indicating substantial future value.

Net Economic Benefit

$86,090,000

Demonstrating the initiative's high economic value post-setup costs.

Return on Investment (ROI)

17217.91%

Signifies exceptional efficiency of resource use and significant returns.

Mean Net Economic Benefit (Monte Carlo Simulation)

$86,150,000 (Approx.)

Suggests a strong financial return, with a high degree of confidence.

Risk Assessment Range

$70,320,000 to $102,540,000

Indicates the range of most likely outcomes from the simulation, showcasing potential variability.

Recommendation

Proceed with Initiative

Strongly supported based on financial viability, substantial ROI, and alignment with GCRI’s mission.

Notes:

This table summarizes the financial analysis of initiating an MSP service within GCRI, designed to support executive decision-making.
The high ROI and significant Net Economic Benefit highlight the strategic and financial advantages of this initiative.
The Monte Carlo simulation provides a comprehensive risk assessment, emphasizing the initiative's financial stability even under varying conditions.
The robust recommendation to proceed reflects confidence in the initiative's ability to enhance GCRI's technological offerings for global risk management and resilience, promising considerable economic growth and impact.

CBA

Objective: To assess the financial viability and expected net economic benefit of initiating an MSP service within GCRI.

Assumptions

Initial Setup Costs: $500,000 for infrastructure setup, software licensing, and initial marketing.
Expected Revenue Streams:
- Subscription-Based Fees: 2,000 subscriptions at $5,000 each.
- Usage-Based Fees: Additional $5,000 per subscription annually.
Discount Rate: 5% per annum, used for calculating the present value of future cash flows.
Time Horizon: Analysis over a 5-year period.

Formulas

Annual Revenue: The sum of revenue from subscription-based fees and usage-based fees.
Present Value (PV) of Expected Benefits:

PV=∑n=1TR(1+r)nPV=n=1∑T​(1+r)nR​

Where $RR$ is the annual revenue, $rr$ is the discount rate, and $TT$ is the time horizon in years.

Net Economic Benefit:
$Net Economic Benefit=PV of Benefits−Initial Setup CostsNet Economic Benefit=PV of Benefits−Initial Setup Costs$

CBA Calculation

# Initialization of assumptions
initial_setup_costs = 500000
subscriptions = 2000
subscription_fee = 5000
usage_fee = 5000
discount_rate = 0.05
time_horizon = 5

# Calculating total expected annual revenue
annual_revenue_subscription = subscriptions * subscription_fee
annual_revenue_usage = subscriptions * usage_fee
annual_revenue_total = annual_revenue_subscription + annual_revenue_usage

# Computing the Present Value of Expected Benefits
pv_of_benefits = sum([annual_revenue_total / ((1 + discount_rate) ** n) for n in range(1, time_horizon + 1)])

# Calculating Net Economic Benefit
net_economic_benefit = pv_of_benefits - initial_setup_costs

print("Present Value of Expected Benefits: $", pv_of_benefits)
print("Net Economic Benefit: $", net_economic_benefit)

# Assumptions
initial_setup_costs = 500000  # Initial setup costs
subscriptions = 2000  # Number of subscriptions
subscription_fee = 5000  # Fee per subscription
usage_fee = 5000  # Additional usage fee per subscription
discount_rate = 0.05  # Discount rate
years = 5  # Time horizon

# Revenue Calculations
annual_revenue = (subscriptions * subscription_fee) + (subscriptions * usage_fee)

# Present Value of Expected Benefits
pv_of_benefits = sum([annual_revenue / ((1 + discount_rate) ** n) for n in range(1, years + 1)])

# Net Economic Benefit
net_economic_benefit = pv_of_benefits - initial_setup_costs

# Display the results
print(f"Annual Revenue: ${annual_revenue}")
print(f"Present Value of Benefits (5 Years): ${pv_of_benefits:,.2f}")
print(f"Net Economic Benefit (5 Years): ${net_economic_benefit:,.2f}")

Financial Analysis Aspect

Details

Amount (USD)

Initial Setup Costs

Costs for infrastructure setup, software licensing, and initial marketing for the MSP service.

$500,000

Annual Subscription Revenue

Based on 2,000 subscriptions at $5,000 each.

$10,000,000

Annual Usage Fee Revenue

Additional fees averaging $5,000 per subscription annually for 2,000 subscriptions.

$10,000,000

Total Annual Revenue

Combined revenue from subscription and usage fees.

$20,000,000

Present Value of Expected Benefits (5 Years)

Calculated using a 5% discount rate over a 5-year period.

$86,589,533.41

Net Economic Benefit (5 Years)

Difference between the PV of expected benefits and the initial setup costs.

$86,089,533.41

Annual Revenue from MSP Services:

Subscription-Based Revenue: 2,000 subscriptions * $5,000/member = $10,000,000
Usage-Based Revenue: 2,000 subscriptions * $5,000/member = $10,000,000
Total Annual Revenue: $20,000,000

Strategic Insight:

The calculated Net Economic Benefit of approximately $86.09 million over 5 years significantly underscores the financial viability and strategic advantage of launching the MSP service. This initiative not only aligns with GCRI's goals of leveraging technology for risk management and resilience but also represents a substantial opportunity for economic growth and enhancing global impact.

ROI

Objective: This analysis aims to assess the financial viability and expected net economic benefit of launching a Managed Services Provider (MSP) service within GCRI.

Assumptions:

Initial Setup Costs: $500,000 for infrastructure setup, software licensing, and initial marketing efforts.
Expected Revenue Streams:
- Subscription-Based Fees: 2,000 subscriptions at $5,000 each.
- Usage-Based Fees: An additional $5,000 per subscription annually.
Discount Rate: 5% per annum.
Time Horizon: Analysis over a 5-year period.

Financial Overview:

Annual Revenue from Subscription-Based Fees: 2,000 subscriptions * $5,000/member = $10,000,000.
Annual Revenue from Usage-Based Fees: 2,000 subscriptions * $5,000/member = $10,000,000.
Total Annual Revenue: $20,000,000.

# Correcting and consolidating the calculation for the ROI of GCRI's MSP service

# Initialization of assumptions for clearer calculation
initial_setup_costs_msp = 500000  # Initial setup costs for MSP
subscriptions_msp = 2000  # Number of subscriptions
subscription_fee_msp = 5000  # Fee per subscription
usage_fee_msp = 5000  # Additional usage fee per subscription
discount_rate_msp = 0.05  # Discount rate for PV calculations
time_horizon_msp = 5  # Time horizon for analysis

# Calculating total expected annual revenue for MSP service
annual_revenue_subscription_msp = subscriptions_msp * subscription_fee_msp  # Revenue from subscription fees
annual_revenue_usage_msp = subscriptions_msp * usage_fee_msp  # Revenue from usage fees
annual_revenue_total_msp = annual_revenue_subscription_msp + annual_revenue_usage_msp  # Total annual revenue

# Computing the Present Value of Expected Benefits over the 5-year period
pv_of_benefits_msp = sum([annual_revenue_total_msp / ((1 + discount_rate_msp) ** n) for n in range(1, time_horizon_msp + 1)])

# Calculating Net Economic Benefit for the MSP service
net_economic_benefit_msp = pv_of_benefits_msp - initial_setup_costs_msp

# Calculating ROI for the MSP service
roi_msp = (net_economic_benefit_msp / initial_setup_costs_msp) * 100

annual_revenue_total_msp, pv_of_benefits_msp, net_economic_benefit_msp, roi_msp

Financial Metric

Amount (USD)

Initial Setup Costs

$500,000

Total Annual Revenue

$20,000,000

Present Value of Expected Benefits (5 Years)

$86,589,533

Net Economic Benefit (5 Years)

$86,089,533

Return on Investment (ROI)

17217.91%

Strategic Insight:

The ROI analysis for the MSP service initiative reveals an exceptionally high Return on Investment of 17217.91%, indicating a significant financial viability and strategic advantage for GCRI. This initiative aligns with GCRI's objectives of leveraging technology for risk management and resilience, offering a substantial opportunity for economic growth and enhancing global impact. The substantial net economic benefit of approximately $86.09 million over 5 years underscores the potential of this service to become a pivotal part of GCRI's portfolio, driving economic growth and global influence.

The MSP service represents a strategic and financially sound initiative for GCRI, promising not only to align with but also significantly advance the organization's mission. The projected ROI underscores the efficiency and potential impact of this investment, advocating for board support to proceed with this innovative service offering. This initiative is poised to position GCRI at the forefront of technological solutions for risk management, demonstrating substantial growth potential and global leadership in the field.

Simulation

Objective: Utilizing Monte Carlo simulations to evaluate the financial viability and assess the uncertainty and risk associated with the expected net economic benefit of initiating a Managed Services Provider (MSP) service within GCRI.

# Monte Carlo Simulation Parameters for MSP service financial analysis
n_simulations_msp = 10000
np.random.seed(42)  # For reproducibility

# Assumptions with potential variability
# Simulating variability in the number of subscriptions and additional usage fees
mean_subscriptions = 2000
std_dev_subscriptions = 200  # Assuming a 10% standard deviation for variability in the number of subscriptions

mean_additional_fee = 5000
std_dev_additional_fee = 500  # Assuming a 10% standard deviation for variability in additional fees

# Simulating annual revenues
simulated_pv_of_benefits_msp = []
for _ in range(n_simulations_msp):
    # Simulating the number of subscriptions and additional usage fees
    simulated_subscriptions = np.random.normal(mean_subscriptions, std_dev_subscriptions)
    simulated_additional_fee = np.random.normal(mean_additional_fee, std_dev_additional_fee)
    
    # Calculating simulated annual revenues
    simulated_annual_revenue_subscription = simulated_subscriptions * subscription_fee_msp
    simulated_annual_revenue_usage = simulated_subscriptions * simulated_additional_fee
    
    simulated_total_annual_revenue = simulated_annual_revenue_subscription + simulated_annual_revenue_usage
    
    # Calculating simulated PV of benefits
    simulated_pv = sum([simulated_total_annual_revenue / ((1 + discount_rate_msp) ** n) for n in range(1, time_horizon_msp + 1)])
    simulated_pv_of_benefits_msp.append(simulated_pv)

# Calculating simulated Net Economic Benefits
simulated_net_economic_benefits_msp = np.array(simulated_pv_of_benefits_msp) - initial_setup_costs_msp

# Summary statistics
mean_net_economic_benefit_msp = np.mean(simulated_net_economic_benefits_msp)
std_dev_net_economic_benefit_msp = np.std(simulated_net_economic_benefits_msp)

# Calculating the 5th and 95th percentiles to assess risk and uncertainty
percentile_5th_msp = np.percentile(simulated_net_economic_benefits_msp, 5)
percentile_95th_msp = np.percentile(simulated_net_economic_benefits_msp, 95)

mean_net_economic_benefit_msp, std_dev_net_economic_benefit_msp, percentile_5th_msp, percentile_95th_msp

Statistic

Value (USD)

Mean Net Economic Benefit

$86,153,041

Standard Deviation of Net Economic Benefit

$9,761,474

5th Percentile

$70,319,185

95th Percentile

$102,539,995

Interpretation:

Mean Net Economic Benefit: The average net economic benefit from initiating the MSP service is approximately $86.15 million over 5 years, indicating a highly favorable financial return on the investment.
Standard Deviation: A standard deviation of approximately $9.76 million reflects the variability in net economic benefits, indicating the range of potential outcomes due to uncertainties in subscription numbers and usage fees.
5th and 95th Percentiles: These percentiles provide insights into the range of outcomes, with a 90% confidence interval. The net economic benefit will likely fall between $70.32 million and $102.54 million, illustrating the potential variability in financial outcomes.

Strategic Insight:

The Monte Carlo simulation highlights the substantial financial viability and strategic advantage of launching the MSP service within GCRI. Despite inherent uncertainties in revenue streams, the expected net economic benefits significantly outweigh the initial setup costs, aligning with GCRI's objectives of leveraging technology for risk management and resilience.

Conclusion for the Board:

The financial analysis, enriched by Monte Carlo simulations, offers a nuanced understanding of the MSP service initiative's economic outcomes. With a significant average net economic benefit and manageable variability, this initiative demonstrates efficient resource utilization, promising substantial returns to support GCRI's mission. The board is encouraged to support this initiative, acknowledging its potential to position GCRI at the forefront of technological solutions for risk management while navigating inherent uncertainties.

Income Statement

Financial Metrics/Year

Year 1 (USD)

Year 2 (USD)

Year 3 (USD)

Year 4 (USD)

Year 5 (USD)

5-Year Total (USD)

Initial Setup Costs

$500,000

Total Revenue

$20,000,000

$21,000,000

$22,050,000

$23,152,500

$24,310,125

$110,512,625

Operating Expenses

$6,000,000

$6,300,000

$6,615,000

$6,945,750

$7,292,538

$33,153,288

EBITDA

$14,000,000

$14,700,000

$15,435,000

$16,206,750

$17,017,587

$77,359,337

Depreciation & Amortization

$100,000

$105,000

$110,250

$115,763

$121,551

$552,564

Operating Income (EBIT)

$13,900,000

$14,595,000

$15,324,750

$16,090,987

$16,896,036

$76,806,773

Interest Expense

$25,000

$26,250

$27,563

$28,941

$30,388

$138,142

Pre-Tax Income

$13,875,000

$14,568,750

$15,297,187

$16,062,046

$16,865,648

$76,668,631

Taxes (20%)

$2,775,000

$2,913,750

$3,059,437

$3,212,409

$3,373,130

$15,333,726

Net Income

$11,100,000

$11,655,000

$12,237,750

$12,849,637

$13,492,518

$61,334,905

ROI

17217.91%

Net Profit Margin

55.5%

Cumulative Cash Flow

$11,100,000

$22,755,000

$34,992,750

$47,842,387

$61,334,905

Key Insights:

Revenue Growth: Demonstrates strong growth in annual revenue, underpinning the MSP service's increasing market demand and value proposition.
Cost Management: Highlights effective cost management strategies, with operating expenses increasing at a manageable rate relative to revenue.
Profitability: Evidences substantial EBITDA and net income, indicating the MSP service's potential for generating significant profits.
Investment Return: An extraordinary ROI of 17217.91% over 5 years, showcasing the high efficiency of capital use and remarkable financial returns.
Profit Margin: Maintains an exceptionally high net profit margin, illustrating the initiative's capacity to efficiently convert revenue into profit.
Risk Assessment: The Monte Carlo simulation suggests financial resilience, providing a realistic outlook on financial outcomes under varying conditions.
Strategic Recommendation: Advocates for advancing with the MSP service initiative, recognizing its significant potential to drive economic growth, enhance GCRI's technological capacity, and bolster its global influence in risk management and resilience.

Last updated 1 year ago

Was this helpful?

MSP

Executive Summary: MSP Service Initiative

Financial Metrics

Value (USD)

Comments

Initial Setup Costs

$500,000

Covering infrastructure, software licensing, and initial marketing efforts.

Annual Revenue Projections

$20,000,000

From 2,000 subscriptions with subscription and usage-based fees.

Present Value of Expected Benefits

$86,090,000

Calculated over 5 years at a 5% discount rate, indicating substantial future value.

Net Economic Benefit

$86,090,000

Demonstrating the initiative's high economic value post-setup costs.

Return on Investment (ROI)

17217.91%

Signifies exceptional efficiency of resource use and significant returns.

Mean Net Economic Benefit (Monte Carlo Simulation)

$86,150,000 (Approx.)

Suggests a strong financial return, with a high degree of confidence.

Risk Assessment Range

$70,320,000 to $102,540,000

Indicates the range of most likely outcomes from the simulation, showcasing potential variability.

Recommendation

Proceed with Initiative

Strongly supported based on financial viability, substantial ROI, and alignment with GCRI’s mission.

Notes:

This table summarizes the financial analysis of initiating an MSP service within GCRI, designed to support executive decision-making.
The high ROI and significant Net Economic Benefit highlight the strategic and financial advantages of this initiative.
The Monte Carlo simulation provides a comprehensive risk assessment, emphasizing the initiative's financial stability even under varying conditions.
The robust recommendation to proceed reflects confidence in the initiative's ability to enhance GCRI's technological offerings for global risk management and resilience, promising considerable economic growth and impact.

CBA

Objective: To assess the financial viability and expected net economic benefit of initiating an MSP service within GCRI.

Assumptions

Initial Setup Costs: $500,000 for infrastructure setup, software licensing, and initial marketing.
Expected Revenue Streams:
- Subscription-Based Fees: 2,000 subscriptions at $5,000 each.
- Usage-Based Fees: Additional $5,000 per subscription annually.
Discount Rate: 5% per annum, used for calculating the present value of future cash flows.
Time Horizon: Analysis over a 5-year period.

Formulas

Annual Revenue: The sum of revenue from subscription-based fees and usage-based fees.
Present Value (PV) of Expected Benefits:

PV=∑n=1TR(1+r)nPV=n=1∑T​(1+r)nR​

Where $RR$ is the annual revenue, $rr$ is the discount rate, and $TT$ is the time horizon in years.

Net Economic Benefit:
$Net Economic Benefit=PV of Benefits−Initial Setup CostsNet Economic Benefit=PV of Benefits−Initial Setup Costs$

CBA Calculation

# Initialization of assumptions
initial_setup_costs = 500000
subscriptions = 2000
subscription_fee = 5000
usage_fee = 5000
discount_rate = 0.05
time_horizon = 5

# Calculating total expected annual revenue
annual_revenue_subscription = subscriptions * subscription_fee
annual_revenue_usage = subscriptions * usage_fee
annual_revenue_total = annual_revenue_subscription + annual_revenue_usage

# Computing the Present Value of Expected Benefits
pv_of_benefits = sum([annual_revenue_total / ((1 + discount_rate) ** n) for n in range(1, time_horizon + 1)])

# Calculating Net Economic Benefit
net_economic_benefit = pv_of_benefits - initial_setup_costs

print("Present Value of Expected Benefits: $", pv_of_benefits)
print("Net Economic Benefit: $", net_economic_benefit)

# Assumptions
initial_setup_costs = 500000  # Initial setup costs
subscriptions = 2000  # Number of subscriptions
subscription_fee = 5000  # Fee per subscription
usage_fee = 5000  # Additional usage fee per subscription
discount_rate = 0.05  # Discount rate
years = 5  # Time horizon

# Revenue Calculations
annual_revenue = (subscriptions * subscription_fee) + (subscriptions * usage_fee)

# Present Value of Expected Benefits
pv_of_benefits = sum([annual_revenue / ((1 + discount_rate) ** n) for n in range(1, years + 1)])

# Net Economic Benefit
net_economic_benefit = pv_of_benefits - initial_setup_costs

# Display the results
print(f"Annual Revenue: ${annual_revenue}")
print(f"Present Value of Benefits (5 Years): ${pv_of_benefits:,.2f}")
print(f"Net Economic Benefit (5 Years): ${net_economic_benefit:,.2f}")

Financial Analysis Aspect

Details

Amount (USD)

Initial Setup Costs

Costs for infrastructure setup, software licensing, and initial marketing for the MSP service.

$500,000

Annual Subscription Revenue

Based on 2,000 subscriptions at $5,000 each.

$10,000,000

Annual Usage Fee Revenue

Additional fees averaging $5,000 per subscription annually for 2,000 subscriptions.

$10,000,000

Total Annual Revenue

Combined revenue from subscription and usage fees.

$20,000,000

Present Value of Expected Benefits (5 Years)

Calculated using a 5% discount rate over a 5-year period.

$86,589,533.41

Net Economic Benefit (5 Years)

Difference between the PV of expected benefits and the initial setup costs.

$86,089,533.41

Annual Revenue from MSP Services:

Subscription-Based Revenue: 2,000 subscriptions * $5,000/member = $10,000,000
Usage-Based Revenue: 2,000 subscriptions * $5,000/member = $10,000,000
Total Annual Revenue: $20,000,000

Strategic Insight:

ROI

Objective: This analysis aims to assess the financial viability and expected net economic benefit of launching a Managed Services Provider (MSP) service within GCRI.

Assumptions:

Initial Setup Costs: $500,000 for infrastructure setup, software licensing, and initial marketing efforts.
Expected Revenue Streams:
- Subscription-Based Fees: 2,000 subscriptions at $5,000 each.
- Usage-Based Fees: An additional $5,000 per subscription annually.
Discount Rate: 5% per annum.
Time Horizon: Analysis over a 5-year period.

Financial Overview:

Annual Revenue from Subscription-Based Fees: 2,000 subscriptions * $5,000/member = $10,000,000.
Annual Revenue from Usage-Based Fees: 2,000 subscriptions * $5,000/member = $10,000,000.
Total Annual Revenue: $20,000,000.

# Correcting and consolidating the calculation for the ROI of GCRI's MSP service

# Initialization of assumptions for clearer calculation
initial_setup_costs_msp = 500000  # Initial setup costs for MSP
subscriptions_msp = 2000  # Number of subscriptions
subscription_fee_msp = 5000  # Fee per subscription
usage_fee_msp = 5000  # Additional usage fee per subscription
discount_rate_msp = 0.05  # Discount rate for PV calculations
time_horizon_msp = 5  # Time horizon for analysis

# Calculating total expected annual revenue for MSP service
annual_revenue_subscription_msp = subscriptions_msp * subscription_fee_msp  # Revenue from subscription fees
annual_revenue_usage_msp = subscriptions_msp * usage_fee_msp  # Revenue from usage fees
annual_revenue_total_msp = annual_revenue_subscription_msp + annual_revenue_usage_msp  # Total annual revenue

# Computing the Present Value of Expected Benefits over the 5-year period
pv_of_benefits_msp = sum([annual_revenue_total_msp / ((1 + discount_rate_msp) ** n) for n in range(1, time_horizon_msp + 1)])

# Calculating Net Economic Benefit for the MSP service
net_economic_benefit_msp = pv_of_benefits_msp - initial_setup_costs_msp

# Calculating ROI for the MSP service
roi_msp = (net_economic_benefit_msp / initial_setup_costs_msp) * 100

annual_revenue_total_msp, pv_of_benefits_msp, net_economic_benefit_msp, roi_msp

Financial Metric

Amount (USD)

Initial Setup Costs

$500,000

Total Annual Revenue

$20,000,000

Present Value of Expected Benefits (5 Years)

$86,589,533

Net Economic Benefit (5 Years)

$86,089,533

Return on Investment (ROI)

17217.91%

Strategic Insight:

Simulation

# Monte Carlo Simulation Parameters for MSP service financial analysis
n_simulations_msp = 10000
np.random.seed(42)  # For reproducibility

# Assumptions with potential variability
# Simulating variability in the number of subscriptions and additional usage fees
mean_subscriptions = 2000
std_dev_subscriptions = 200  # Assuming a 10% standard deviation for variability in the number of subscriptions

mean_additional_fee = 5000
std_dev_additional_fee = 500  # Assuming a 10% standard deviation for variability in additional fees

# Simulating annual revenues
simulated_pv_of_benefits_msp = []
for _ in range(n_simulations_msp):
    # Simulating the number of subscriptions and additional usage fees
    simulated_subscriptions = np.random.normal(mean_subscriptions, std_dev_subscriptions)
    simulated_additional_fee = np.random.normal(mean_additional_fee, std_dev_additional_fee)
    
    # Calculating simulated annual revenues
    simulated_annual_revenue_subscription = simulated_subscriptions * subscription_fee_msp
    simulated_annual_revenue_usage = simulated_subscriptions * simulated_additional_fee
    
    simulated_total_annual_revenue = simulated_annual_revenue_subscription + simulated_annual_revenue_usage
    
    # Calculating simulated PV of benefits
    simulated_pv = sum([simulated_total_annual_revenue / ((1 + discount_rate_msp) ** n) for n in range(1, time_horizon_msp + 1)])
    simulated_pv_of_benefits_msp.append(simulated_pv)

# Calculating simulated Net Economic Benefits
simulated_net_economic_benefits_msp = np.array(simulated_pv_of_benefits_msp) - initial_setup_costs_msp

# Summary statistics
mean_net_economic_benefit_msp = np.mean(simulated_net_economic_benefits_msp)
std_dev_net_economic_benefit_msp = np.std(simulated_net_economic_benefits_msp)

# Calculating the 5th and 95th percentiles to assess risk and uncertainty
percentile_5th_msp = np.percentile(simulated_net_economic_benefits_msp, 5)
percentile_95th_msp = np.percentile(simulated_net_economic_benefits_msp, 95)

mean_net_economic_benefit_msp, std_dev_net_economic_benefit_msp, percentile_5th_msp, percentile_95th_msp

Statistic

Value (USD)

Mean Net Economic Benefit

$86,153,041

Standard Deviation of Net Economic Benefit

$9,761,474

5th Percentile

$70,319,185

95th Percentile

$102,539,995

Interpretation:

Mean Net Economic Benefit: The average net economic benefit from initiating the MSP service is approximately $86.15 million over 5 years, indicating a highly favorable financial return on the investment.
Standard Deviation: A standard deviation of approximately $9.76 million reflects the variability in net economic benefits, indicating the range of potential outcomes due to uncertainties in subscription numbers and usage fees.
5th and 95th Percentiles: These percentiles provide insights into the range of outcomes, with a 90% confidence interval. The net economic benefit will likely fall between $70.32 million and $102.54 million, illustrating the potential variability in financial outcomes.

Strategic Insight:

Conclusion for the Board:

Income Statement

Financial Metrics/Year

Year 1 (USD)

Year 2 (USD)

Year 3 (USD)

Year 4 (USD)

Year 5 (USD)

5-Year Total (USD)

Initial Setup Costs

$500,000

Total Revenue

$20,000,000

$21,000,000

$22,050,000

$23,152,500

$24,310,125

$110,512,625

Operating Expenses

$6,000,000

$6,300,000

$6,615,000

$6,945,750

$7,292,538

$33,153,288

EBITDA

$14,000,000

$14,700,000

$15,435,000

$16,206,750

$17,017,587

$77,359,337

Depreciation & Amortization

$100,000

$105,000

$110,250

$115,763

$121,551

$552,564

Operating Income (EBIT)

$13,900,000

$14,595,000

$15,324,750

$16,090,987

$16,896,036

$76,806,773

Interest Expense

$25,000

$26,250

$27,563

$28,941

$30,388

$138,142

Pre-Tax Income

$13,875,000

$14,568,750

$15,297,187

$16,062,046

$16,865,648

$76,668,631

Taxes (20%)

$2,775,000

$2,913,750

$3,059,437

$3,212,409

$3,373,130

$15,333,726

Net Income

$11,100,000

$11,655,000

$12,237,750

$12,849,637

$13,492,518

$61,334,905

ROI

17217.91%

Net Profit Margin

55.5%

Cumulative Cash Flow

$11,100,000

$22,755,000

$34,992,750

$47,842,387

$61,334,905

Key Insights:

Revenue Growth: Demonstrates strong growth in annual revenue, underpinning the MSP service's increasing market demand and value proposition.
Cost Management: Highlights effective cost management strategies, with operating expenses increasing at a manageable rate relative to revenue.
Profitability: Evidences substantial EBITDA and net income, indicating the MSP service's potential for generating significant profits.
Investment Return: An extraordinary ROI of 17217.91% over 5 years, showcasing the high efficiency of capital use and remarkable financial returns.
Profit Margin: Maintains an exceptionally high net profit margin, illustrating the initiative's capacity to efficiently convert revenue into profit.
Risk Assessment: The Monte Carlo simulation suggests financial resilience, providing a realistic outlook on financial outcomes under varying conditions.
Strategic Recommendation: Advocates for advancing with the MSP service initiative, recognizing its significant potential to drive economic growth, enhance GCRI's technological capacity, and bolster its global influence in risk management and resilience.

Last updated 1 year ago

Was this helpful?