Economic feasibility analysis:

A. Consider the benefits of developing an information system at $55,000 per year, one time costs of $40,000, recurring costs of $30,000 for first four years and recurring costs of $35,000 for years 5th to 8th, a discount rate of 8 percent, and an 8- years' time horizon, calculate the net present value of these costs and benefits of an information system. Also calculate the overall return on investment of the project and then present a break-even analysis. At what point does breakeven occur?

B. Change the discount rate to 10 percent, the recurring costs to $35,000 for all years and redo the analysis.

All calculations of annually variables are included in the answer & Preferably Excel format

Enable Editing C10 -42500 A B D G Econmic feasibility Analysis H Year of project O 1 4 Build New System 5 TOTALS $0 $50,000 $50,000 $50,000 $50,000 $50,000 Discunt Rate (12%)=1/power((1+.12), Year n) PV of benefits NPV of all benefits SO one-time COSTS ($42,500) 12 Continue Maintaining Existing System 13 Recuring Costs ($28,500) ($28,500) ($28,500) ($28,500) ($28,500) 14 Discubt Rate (12%) 15 PV of Recurring Costs 16 NFV of All COSTS so 18 19 20 Overall NFV so 22 ROI=Overall NPV /NPV of Costs #DIV/O! 23 24 Year ofproject O 1 2 3 4 5 25 Break-Even Analyis 26 Yearly NPV Cash low 27 Overall NPV Cash Flow 28 29 Project break-even occursbetween years _and _: 30 break-even ratio = (yearly NPV cash flow - general PV cash flow) / yearly NPVcash flow 31 Break-Even occurs in ? years 32 Sheet1