Question
5. Assume monetary benefits of an information system of $50,000 (Year 0) and increasing benefits of $10,000 a year for the next five years (Year
5. Assume monetary benefits of an information system of $50,000 (Year 0) and increasing benefits of $10,000 a year for the next five years (Year 1 = $60,000, Year 2 = $70,000, Year 3 = $80,000, Year 4 = $90,000, Year 5 = $100,000). One-time development costs were $90,000 (Year 0) and recurring costs were $50,000 for the systems life (i.e., Year 1 = $50,000, Year 2 = $50,000, Year 3 = $50,000, Year 4 = $50,000, Year 5 = $50,000. The discount rate for the company was 5 percent. The present value of Year 0 does not need to be discounted. Using the given time horizon (Year 0, Year 1, Year 1, Year 1, Year 1, Year 1, Year 5), calculate the net present value of these costs and benefits. Also, calculate the overall return on investment (ROI) and then present a break-even analysis. At what point does break-even occur? Use Excel to develop the economic feasibility model. For this question, upload your completed Excel file. (4 points)
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