Background You are helping the IT team at Game Technology study several software acquisition options for their Customer Contact Care system (C3 ). The IT team is considering two commercial software packages and an in-house development option. They prepared the following summary: Option Description Costs Benefits Software Solutions, Inc. Software package Four-year useful life Less flexible than in-house system Some customizing needed $8,000 to purchase $1,500 to install and configure $2,500 to load existing data $1,000 additional hardware needed $2,000 annual support fee after first year free $9,000/yr. through positive customer response. Cannot predict other specific savings. Increased sales, improved customer care, and better productivity are expected. CRM Corp. Software package Five-year useful life Less flexible than in-house system Moderate customizing needed Runs slower than other options $7,000 to purchase $2,500 to install and configure $2,000 to load existing data $4,000 additional hardware needed $1,200 annual support fee in all five years Same as above Develop C3 system in-house In-house system Six-year useful life, can use our software and hardware Easiest to update and maintain $15,000 to develop, install, and configure $1,000 to load existing data Existing staff can handle support Same as above Practice Tasks Study the summary carefully and prepare spreadsheet templates. You should assume that all three options require a six-month period for acquisition or development, installation, configuration, and data loading. This period is called Year 0. Actual operation begins in Year 1. Now complete these tasks: 

Task 1. Perform ROI and NPV analysis of the Software Solutions package. Use an 8% discount factor. 

Task 2. Perform ROI analysis of the in-house development option. Critical Thinking Challenge: Tasks Page Challenge Tasks

After you complete the Practice Tasks, you learn about new developments at Game Technology. It seems that the Game Technology team liked your work, and asked you to perform some additional tasks.

Task 1. Perform ROI and NPV analysis of the CRM package. Use an 8% discount factor.

Task 2. Perform NPV analysis of the in-house option. Use an 8% discount factor.