A new IS project has been proposed that is expected to produce cost savings but also an increase in revenue. The initial cost to establish the system is estimated to be $750,000. The remaining cash flow data is presented in the following table.

(000)

Year 1

Year 2

Year 3

Year 4

Year 5

Increased Revenue ($)

50

125

160

250

250

Cost Savings ($)

25

75

75

75

75

Depreciation ($)

100

100

125

100

Initial Expense ($)

750

Requirement 6: ....... Calculate the return on investment (ROI) for this project?

PART 4: SYSTEM PROJECT COST-BENEFIT ANALYSIS (20 MARKS)

Review cost-benefit ERP analysis provided.

Requirement 6:What is the one-time cost of the ERP system? (5 MARKS)

Requirement 7:What is the recurring cost of the ERP system? (5 MARKS)

Requirement 8:If the project is delayed 3 months, what is the impact to cost and the overall financial

benefit in the first year after system implementation? (5 MARKS)

Requirement 9:Suppose the project is NOT delayed 3 months, reviewing the ROI and the payback calculations provided should we do the systems project? (5 MARKS)