Change the recurring costs in Problem and Exercise 11 to $40,000 and redo the analysis. Problem and

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Change the recurring costs in Problem and Exercise 11 to $40,000 and redo the analysis.

Problem and Exercise 11

Assume monetary benefits of an information system of
$40,000 the first year and increasing benefits of $10,000 a year for the next five years (year 1 = $50,000, year 2 = $60,000, year 3 = $70,000, year 4 = $80,000, year 5 =
$90,000). One-time development costs were $80,000 and recurring costs were $45,000 over the duration of the system’s life. The discount rate for the company was 11 percent. Using a six-year time horizon, calculate the net present value of these costs and benefits. Also calculate the overall return on investment and then present a break-even analysis. At what point does break-even occur?

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Modern Systems Analysis And Design

ISBN: 9780132991308

7th Edition

Authors: Jeffrey A Hoffer, Joey George, Joseph S Valacich

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