Assume monetary benefits of an information system of $40,000 the first year and increasing benefits of $10,000 a year for the next five years (year 1=$50,000, year 2=$60,000, year 3=$70,000, year 4=$80,000, year 5=$90,000). One-time development costs were $80,000 and recurring costs were $45,000 over the duration of the systems life. The discount rate for the company was 11 percent. Using a six-year time horizon, calculate the overall net present value:

a. 1,000

b. 4,720

c. 34,900

d. 12,880

Now calculate the overall ROI:

a. 0.25

b. 0.18

c. 0.37

d. 0.02

At what point does the breakeven occur?

a. 1.5 years

b. 2.6 years

c. Does not occur

d. 3.3 years