Question
Using the below information, calculate the net present value, the payback period, and the return on investment by using a discount rate of 8 percent
- Using the below information, calculate the net present value, the payback period, and the return on investment by using a discount rate of 8 percent for the following systems development project. The development costs for the system were $225,000. Do an eight-year ROI.
| Year | Annual Benefits | Yearly Operating Cost | Discount Factor @ 8% |
| 1 | 55,000 | 7,000 | .9295 |
| 2 | 60,000 | 7,500 | .8573 |
| 3 | 70,000 | 8,000 | .7938 |
| 4 | 80,000 | 8,800 | .7349 |
| 5 | 85,000 | 8,800 | .6805 |
| 6 | 90,000 | 9,000 | .6301 |
| 7 | 95,000 | 9,500 | .5833 |
| 8 | 100,000 | 9,500 | .5401 |
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Financial and Managerial Accounting the basis for business decisions
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
17th edition
007802577X, 978-0078025778
