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Your company is attempting to study the feasibility of a particular system development project. The table below represents the costs and benefits for the project
Your company is attempting to study the feasibility of a particular system development project. The table below represents the costs and benefits for the project on 4 years with a discount factor of 12%. Use the cost benefit analysis to determine when the project payback for its cost. Use the following formula to calculate the Present Value (PV) for each year: PVn = 1/(1+i)" where n is the number of years and i is the discount rate. Note: take 3 digits after the decimal point while calculating PVn Year 0 1 2 3 4 PVn of discount factor = 12% 1.000 Development Cost ($90,000) Operations Cost ($30,000) ($33,000) ($36,000) ($40,000) Present Value Cost Cumulative Cost Annual Benefits $0 $70,000 $75,000 $85,000 $100,000 Present Value Benefits Cumulative Benefits Cumulative Cost + Benefits
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