If the following table were presented comparing the costs and tangible benefits of two accounting information systems:

Costs and Tangible Benefits

System 1

System 2

Project completion time

1 year

1 year

Expected life of the system

5 years

5 years

One-time costs

$300,000

$140,000

Recurring costs incurred at beginning of years 15

$45,000

$55,000

Annual tangible benefits incurred at end of years 15

$170,000

$135,000

a)Based on this information, which system is likely to be chosen? Discuss in 80100 words.

b)Does this table provide enough information to make an informed decision? Discuss in 100120 words.

2.Using the formula PV=FV(1 (1 + i)n) calculate the present value of $1,000 received at the end of two years with a current interest rate of 8% compounded annually.

3.Calculate which of the following suppliers is the most cost-effective:

Safe Hands Insurance Company has received a number of quotations for their new AIS. Calculate how much each system will cost per year and determine which of the quotes is most cost-effective.

Access IT Company has provided a quote of $84,000. The system will last for seven years. They provide free services and maintenance. They offer technical support for an additional cost of $6,000 a year. All the required hardware has been included in the cost of the quote.

b)Vision IT Technical Consultants has provided a quote of $105,000. The system will last for 10 years. Their quote includes technical support. The quote includes all the required hardware; however, the hardware must be checked and serviced by them, twice a year at a cost of $5,000 per service.

c)Total IT Solutions has provided a quote of $65,000. The system will last for five years. The cost of technical support, services and maintenance are included in the price. The hardware required will cost an additional $22,500.

4.Carefully checking suppliers references is one form of risk management. What risks does reference checking protect against? Discuss in 120150 words

5

What is the purpose of risk management analyses? Discuss in 120150 words.