Question
Create cost-benefit analysis table for the following conditions given below - Use multiple sheets in same excel file PART A 1. (Exercise 5.38 Pg 138)
Create cost-benefit analysis table for the following conditions given below - Use multiple sheets in same excel file
PART A
1. (Exercise 5.38 Pg 138) Assume the monetary benefits of an information system at $85,000 per year, one-time costs of $75,000, recurring costs of $35,000 per year, a discount rate of 12%, and a five year time horizon, calculated the NPV of these costs and benefits of this information system. Also calculate the overall ROI of the project and then present a break-even analysis to show at what point the breakeven occurs. Represent the cost and benefits by year in a line chart.
2. Change the recurring costs to $40,000 and redo all the calculations and graphical representation mentioned above.
PART B
1. (Exercise 5.43) Assume the 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 2 = $50,000, year 3 = $60,000, year 4 = $70,000, year 5 = $80,000, year 6 = $90,000). One-time development costs were $80,000 and recurring costs were $45,000 over the duration of the system's life. The discount rate for the company was 11%. Using a six year time horizon, calculate the NPV of these costs and benefits. Also calculate the overall ROI and then present a break-even analysis to show at what point the breakeven occurs. Represent the cost and benefits by year in a line chart.
2. Change the discount rate to 12% and redo all the calculations and graphical representation mentioned above. Make all follow this format please: Include all formulas used, and how to setup the excel document:
Net economic benefit Discount rate (12%) PV of Benefits NPV of all Benefits One-Time Costs Recurring Costs Discount rate(12\%) PV of Costs NPV of all Costs Overall NPV Overall ROI Break Even Analysis Yearly NPV Cash Flow Overall NPV Cash Flow Line Chart Benefits 0 1 2 3 4 5 CostsStep by Step Solution
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