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? Assume the cost of capital is 7%.

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)