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Need help completing this table. I have attach the instructions. CIS 372 CHAPTER 7 ASSIGNMENT Turn to Part 3 of the Systems Analyst's Toolkit (Toolkit
Need help completing this table. I have attach the instructions.
CIS 372 CHAPTER 7 ASSIGNMENT Turn to Part 3 of the Systems Analyst's Toolkit (Toolkit 3, Financial Analysis Tools) and review the concept of net present value (NPV). I posted its ppt in this folder for your reference. What to Do: Determine the NPV for the following: An information system will cost $95,000 to implement over a oneyear period and will produce no savings during that year. When the system goes online the following year, the company will save $30,000 during the first year of operation. For the next four years, the savings will be $20,000 per year. 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 = 1 ( 1+r )n 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 1 =0.952381 as shown in discount factor of Year 1. You will need to fill ( 1+0.05 )1 in the cells with ??? and compute the NPV. Net Present Value Analysis (Assuming a 5% discount rate) Information System Benefits and Costs: Year 0 Benefits Year 1 --- Year 2 Year 3 Year 4 Year 5 ??? ??? ??? ??? ??? 0.952381 ??? ??? ??? ??? --- ??? ??? ??? ??? ??? 95,000 ??? ??? ??? ??? ??? Factor (5%) 1 0.952381 ??? ??? ??? ??? PV of Costs 95,000 ??? ??? ??? ??? ??? Total Factor (5%) PV of Benefits Costs 1 Net Present ValueStep by Step Solution
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