any scenario, the Phase I single-line OCRs already purchased would be kept in service. Thus option F is in effect the baseline option. In essence, all ROIs are net of cash flows associated with Phase I single-line OCRs.
The estimated ROIs for all options under various conditions are shown in figure
Every option under all conditions modeled
shows an ROI above the 20.6 percent, for option A
15 percent (single-line
OCR) under low ZIP+4 usage and a low savings rate. Only if ZIP+4 was even lower (e.g., peaked out at 20 percent usage instead of the 40 percent assumed in the low usage scenario) and/or the savings rate was even lower (e.g., 70 percent of USPS estimates instead of the 80 percent assumed in the low savings rate scenario) would the option A ROI drop below 15 percent.
The highest ROI is 84.6 percent, for option D (automatic conversion) under high ZIP+4 usage, multi-line performance rate, and savings rate. However, under these
conditions options A (single-line OCR), E (hedge conversion), and H (90-10 split .
procurement) have only a slightly lower estimated ROI. The greatest difference between option D (automatic conversion) and option A (single-line OCR) occurs with low ZIP+4 usage and high multi-line OCR performance. Under these conditions, the option D ROI is anywhere from 33 to 50 percent higher than the option A ROI.
The relative ROI ranking of the various options as a function of ZIP+4 usage is as follows (excluding option F, cancel, which has a negative ROI):