Question #1 - Return of Investment: (Please show your work) It} 1'1. technology investment costs $125,000 and will return $145,000 at the end of one year. We will only invest if we can receive return of: 15%. Should we invest? Why? 8) If the investment cost was $126,000 would you still invest? Why? Question #2: Payback Period {Please show your work) A} You want to buy a new student system for $75,000 and it has a useful life of 10 years and a residual value of 510,000. [Salvage Value]. The revenue increase is estimated to be $30,000 per year and operating cost will increase by $25,000 per year {Operating costs includes depreciation: we will use straightline method and taxes] Calculate the payback period. 8) If your company requires a payback of 5 years or less, should you move forward with the purchase? Question #3: Accounting Rate of Return (Please show your work) A} You want to buy a new student system for $75,000 and has a useful life of 10 years and it has a residual value of $10,000. (Salvage lil'alue]. Revenue increase is estimated to be $30,000 per year and operating cost will increase by $25,000 per year {Includes depreciation: we will use straightline method and taxes) Calculate the ARR B) If your company requires ARR of equal or greater than 12% , should you accept the project? Question #4: Capital Investment A} During the annual planning process, you have been given a capital investment budget of $1,200,000 and they will only accept a minimum rate of return of 14%. Using the data in the table below which investment (5] I proposals should we present to the leadership? Question #5: Total Cost of Ownership (TCO) You are responsible for outlining the needs of a new student information system. You will need to dene some of the possible cost for each phase of our student information life cycle. (Implementation, operational and end of life). A) As you calculate the TCU for a New Student Information System: What are some (minimum of 4) of the implementation f starting costs that must be accounted for in the budget? B) .45 you calculate the TCO for a New Student Information System: What are some (minimum of 4) of the operational costs that must be accounted for in the budget? C) As you calculate the TCU for a New Student Information System: What are some (minimum of 4) of the end of life costs that must be accounted for in the budget? Question #6 Make or Bu3.r decision: (Please show your work) A) You are responsible for deciding if we are going to manufacture a component. The cost to produce 1 unit of a component are: S? in direct material, 55 in direct labor, 55 in utilities for factory overhead and $12 in all other fixed costs. You are projecting to produce 6500 units in the rst year. The supplier is going to charge you $44 per unit up to 5999 units and 529.50 per unit for anything 6000 and over. Should you Make or Buy the component? Why? B) What should you do if you are only going to produce 4500 units in the first year? Question #7 PV Cost and PV Benefits, Benefit Cost Ratio , NPV of benefits: (Please show your work) (Template on the excel section of content on D21 will be helpful) Using the data below, calculate the following: A) System A a. PV Cost b. PV Benefits c. Benefit / Cost ratio d. NPV of Benefits B) System B a. PV Cost b. PV Benefits c. Benefit / Cost ratio d. NPV of Benefits C) Which System has a better NPV of Benefits? DATA: Return of 8% r= 8% System A Costs Hardware 14000 3000 3000 3000 Software 1200 2000 2000 1000 Services 2500 2500 2500 2500 Other 3000 2000 2000 1000 Benefits Increased productivity 15000 16000 9000 Lower Error rate 20000 3000 3100 System B Costs Hardware 10000 4000 2500 4000 Software 10000 2000 3000 3000 Services 12000 4000 1200 2000 Benefits Increased productivity 3000 12000 11000 Reduced Work Force 17000 12000 12000Question #8: In the past few weeks we have reviewed the following calculations for evaluating Capital Investments. (Payback and ARR) List 2 advantages and 2 disadvantages of using the AR and Payback methods. Question #9: What are some of the benets from creating a balanced score card for capital investments? (List 4 of the 5 we discussed in class) Question #10: 1What is the difference between the following and provide an example of each. ' SaaS model ' IaaS Model ' PaaS Model