Determine the NPV for the following: An information system will cost $75,000 to implement over a one-year period and with a recurring cost of $50,000 per year for the next 5 years.

When the system goes online the following year, the company will enjoy a monetary benefit of $95,000 per year for the next five years. Assuming a 5 percent discount rate, what is the NPV of the system?

What if the discount rate is changed to 12%?

I set up the computation for you as shown in the table below for discount rate of 5%. Copy and paste the table in Excel and complete the NPV computation. Then you need to repeat the table to compute for 12% discount rate. Are these two cases economical viable? Submit your Excel spreadsheet with these two tables with your explanation in Blackboard.

Note: PV Factor=11+rn

Where r is the rate of return (discount rate) and n is the number of periods. For example, the PV factor of year 1 is equal to 11+0.051=0.952381 as shown in discount factor of Year 1. You will need to fill in the cells with ??? and compute the NPV.

Net Present Value Analysis
(Assuming a 5% discount rate)
Information System Benefits and Costs:
	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Total
Benefits	---	???	???	???	???	???
Factor (5%)	1	0.952381	???	???	???	???
PV of Benefits	---	???	???	???	???	???	???
Costs	75,000	???	???	???	???	???
Factor (5%)	1	0.952381	???	???	???	???
PV of Costs	75,000	???	???	???	???	???	???
					Net Present Value:		???