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Toolkit 3 IM - Systems Analysis and Design Sixth Edition...

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Systems Analysis and Design, Sixth Edition Page 1 of 7 Systems Analysis and Design Sixth Edition Instructor’s Manual SYSTEMS ANALYST’S TOOLKIT PART THREE Financial Analysis Tools OBJECTIVES When students finish this part of the Toolkit, they will be able to: Define economic feasibility Classify costs and benefits into various categories, including tangible or intangible, direct or indirect, fixed or variable, and developmental or operational Understand chargeback methods and how they are used Use payback analysis to calculate the length of time that it takes for a project to pay for itself Use return on investment analysis to measure a project’s profitability Use present value analysis to determine the value of a future project measured in current dollars INSTRUCTOR NOTES Introduction, 558 LECTURE NOTES Point out that Part 3 of the Systems Analyst’s Toolkit explains financial analysis tools. Explain why financial analysis tools are important. Mention how financial analysis tools were used throughout the textbook. Present the Toolkit Introduction Case: Mountain View College Bookstore on page 559. Review the background, participants, location, and discussion topics for the case. Discuss Figure TK 3-1. CLASSROOM ACTIVITIES Consider assigning students to each role in the Toolkit Introduction Case and having them read the case dialogue. Describing costs and benefits, 560 LECTURE NOTES Explain why it is important to be able to identify and classify costs and benefits. Recall economic feasibility , which was introduced in Chapter 2. Economic feasibility tests: Whether the anticipated value of the benefits of a new system outweighs the projected costs of development, and
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2 Chapter 1: Introduction to Systems Analysis and Design Whether an organization has the adequate financial resources to fund the new system during development The justification for a new system is that it will boost profits, either through cost savings or by increased revenues. Define total cost of ownership ( TCO ). Explain how cost-benefit analysis is used as a decision-making tool. Discuss Figures TK 3-2 and TK 3-3. QUICK QUIZZES Assign Review Question 1 on page 576. Cost classifications, 561 LECTURE NOTES List the different ways costs can be classified. Differentiate between tangible costs and intangible costs . Point out how a dollar value sometimes can be estimated for an intangible cost. Although intangibles are not used when calculating payback, return on investment, or net present value, they are important and even may be a deciding factor in determining whether to develop a system. Explain how direct costs are different from indirect costs or overhead expenses .
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