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Assuming monetary benefits of an information system at $100,000 per year starting in year 1, one-time costs of $85,000 in year 0, recurring costs of

Assuming monetary benefits of an information system at $100,000 per year starting in year 1, one-time costs of $85,000 in year 0, recurring costs of $25,000 per year starting in year 1, a discount rate of 10 per cent, and a 5-year time horizon, calculate the net present value (NPV) of an information system's costs and benefits.Calculate the overall return on investment (ROI) of the project. During which year does break-even occur?


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Net economic benefit Discount Rate (10%) PV of Benefits NPV of all BENEFITS One Time Costs Recurring Costs Discount Rate (10%) PV of Recurring Costs NPV of all COSTS Overall NPV Overall ROI Break-Even Analysis Yearly NPV Cash Flow Year 0 Overall NPV Cash Flow Project Break-Even occurs during which year? J 1 Year 1 Year 2 Year 3 Year 4 Year 5 A 0.9091 0.8264 0.7513 0.683 0.6209 B D 0.9091 0.8264 0.7513 0.683 0.6209 C F G

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