LaudonEss6_TIF_ch14

LaudonEss6_TIF_ch14 - Chapter 14 Understanding the Business...

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Chapter 14 Understanding the Business Value of Systems and Managing Change 14-1 Chapter 14 Understanding the Business Value of Systems and Managing Change True-False Questions 1. One reason for the high failure rate among IS projects is that organizations have failed to manage the organizational change process surrounding the introduction of new technology. Answer: True Difficulty: Easy Reference: p. 486 2. A large IS project can be precisely planned with accurate cost figures. Answer: False Difficulty: Easy Reference: p. 486 3. Most system projects can be justified using traditional accounting methods. Answer: True Difficulty: Medium Reference: p. 486 4. Capital projects generate cash flows into and out of the organization. Answer: True Difficulty: Easy Reference: p. 487 5. Financial models express the risks and uncertainty of costs and benefits estimates. Answer: False Difficulty: Medium Reference: p. 488 6. Most technology systems are outdated within five to eight years. Answer: True Difficulty: Easy Reference: p. 489 7. Budgeting for information systems requires that the payback period must be shorter and the rates of return higher than typical capital projects. Answer: True Difficulty: Medium Reference: p. 489 8. One weakness of the payback method is that it ignores the time value of money. Answer: True Difficulty: Medium Reference: p. 491 9. The payback period is especially good for high-risk projects in which the useful life of a project is difficult to determine. Answer: True Difficulty: Medium Reference: p. 491 10. The desired rate of return must equal or exceed the cost of capital in the marketplace. Answer: True Difficulty: Medium Reference: p. 491 11. The total initial investment is divided by the net benefit to arrive at ROI. Answer: False Difficulty: Medium Reference: p. 491
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14-2 Understanding the Business Value of Systems and Managing Change Chapter 14 12. Future savings are not worth as much in today’s dollars as are current savings. Answer: True Difficulty: Easy Reference: p. 492 13. To compare the investment made in today’s dollars with future savings or earnings, you must add the earnings to their present value and calculate the net present value of the investment. Answer: False Difficulty: Hard Reference: p. 492 14. To calculate the profitability index, divide the present value of the total cash inflow from an investment by the initial cost of the investment. Answer: True Difficulty: Medium Reference: p. 492 15. Information-intensive industries should focus on high-benefit, low-risk projects. Answer: False Difficulty: Medium Reference: p. 493 16. The scoring model is a quick method for arriving at a decision on alternative systems. Answer:
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LaudonEss6_TIF_ch14 - Chapter 14 Understanding the Business...

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