Ali is working to develop a preliminary cost-benefit analysis for a new client-server system. He has identified a number of cost factors and values for the new system, summarized in the following tables:

Development Costs-Personnel

2 Systems Analysts 400 hours/ each @ SR50/hour

4 Programmer Analysts 250 hours/ each @ SR35/hour

1 GUI Designer 200 hours/ each @ SR40/hour

1 Telecommunication specialist 50 hours/ each @ SR50/hour

1 System Architect 100 hours/ each @ SR50/hour

1 Database Specialist 15 hours/each @ SR45/hour

1 System Librarian 250 hours/ each @ SR15/hour

Development Costs-Training

4 Oracle training registration SR3500/student

Development Costs-New Hardware and Software

1 Development server SR18700

1 Server software (OS, misc.) SR1500

1 DBMS server software SR7500

7 DBMS client software SR950/client

Annual Operating Costs-Personnel

2 Programmer Analysts 125 hours/ each @ SR35/hour

1 System Librarian . 20 hours/ each @ SR15/hour

Annual Operating Costs-Hardware, Software, and Misc.

1 Maintenance agreement for server SR995

1 Maintenance agreement for server SR525

DBMS software

Preprinted forms 15,000/year @ SR.22/form

The benefits of the new system are expected to come from two sources: increased sales and lower inventory levels. Sales are expected to increase by SR30,000 in the first year of the systems operation and will grow at a rate of 10% each year. thereafter. Savings from lower inventory levels are expected to be SR15,000 per year for each year of the projects life.

Using a format similar to the spreadsheet:

1. Develop a spreadsheet that summarizes this project's cash flow, assuming a 4-year useful life after the project is developed.
2. Compute the present value of the cash flows, using an interest rate of 9%.
3. What is the NPV for this project?
4. What is the ROI for this project?
5. What is the break-even point?
6. Should the approval committee accept this project?