Sources used in this document:

Among the ongoing operational costs, it is reasonable to stagger these costs. They should be counted when they are expected to be recorded. The license fees are also a reasonable cost. There is nothing unreasonable therefore about the expected costs that the company is facing. Based on this assessment, and the assessment of the benefits, with a few minor changes Whirlpool can proceed with the analysis of its investment.

2) at present, Whirlpool is costing out the system through 2007. There are arguments in favor of and against going out further than 2007. It is 1999 now, so 2007 is 8 years into the future. Given that, costs and benefits that far out can be difficult to estimate. As such, there is a case to be made that any estimates that far out should not be included as they are likely to be inaccurate anyway. However, if the project is still ongoing, then the costs and benefits will still be accruing for 2008 and beyond. If that is the case, then the company should consider extended its model to include those future years.

The decision as to whether or not Whirlpool should consider extending its calculations to include cash flows beyond 2007 should take into account a couple of considerations. The first consideration is the expected lifespan of the ERP. It is reasonable that with developments in technology, this ERP will only have an eight-year shelf life before the company begins to consider replacing it with a different system, or an improved version of this system. Knowing how long the company expects to utilize this system is a big factor. Another important factor is how well the company thinks it can project the costs beyond that time. If the business is very stable, it is reasonable that the company's projections might be useful. However, there is also a high risk that the projections are next to worthless, if it is expected that there will significant changes to the firm or industry environment.