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**1. Training return on investment (ROI) is a calculation of economic return on a project. Refer to the lecture for the formula. Review this problem.**

**An organization lost 125 employees last year, at a cost of $5,000.00 each. (Value is derived from cost to rehire and fill opening, as well as lost investment in the employee.) You suggest that a one-time investment in a training program (costing $250,000 up front) will reduce turnover by 50%. Calculate the following numbers using historical figures as your assumptions. **

**1. Total savings that the program stands to create**

**2. Net savings the first year in place**

**3. Return on investment after one year**

**4. Return on investment after two years**

** 5. Return on investment after six months (assume half of the employees/but all of the cost) (5 points)**

**2. Cost-benefit analysis presents data as a ratio to determine financial impact on company profitability. **

**The formula is: cost-benefit ratio = value of projected benefits divided by cost.**

**We have estimated that a training program on sexual harassment will cost $14,000 and result in a savings of $70,000 (the cost of the two settlements we paid last year). **

**1. What is the cost-benefit ratio of this training? (2.5 points)**

** 2. What is the return on investment after one year? (2.5 points)**

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** 3. Do you agree that we can use the amount of our settlements from the prior year as our savings figure? Why or why not? (5 points)**

3. Break-even analysis. This is the point in which revenue (or savings) from the program equals the cost of the program-the time the company has "broken even" on the cost of the training.

Formula = Break-even point = cost/savings * time

*time is the period of time in which the return is being calculated−if annually, then 12 months.

1. A program has an annual cost of $70,000 and is expected to generate in return a savings of $80,000. When would the break-even point occur, given steady savings and costs? (5 points)

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**4. Why is it important for trainers to be able to estimate the ROI, cost-benefit analysis, and break even analysis? Give three reasons why calculating this information will assist the training endeavors. (5 points)**

Solution Description

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