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Develop/purchase/lease new user training material for the new system 5Site preparationAcquire or lease a site to host the new computer system 6SuppliesOne time cost of supplies to support the development of the new systemRecurring cost Worksheet1Application SoftwaremaintenanceOngoing cost to maintain/improve and fix issues in the new system2Hardware Annual hardware maintenance cost3SoftwareAnnual maintenance cost of the software for the system4
WBIT 3110, Unit 2 HW4User TrainingDevelop/purchase/lease new user training material for the new system 5Site preparationAcquire or lease a site to host the new computer system 6SuppliesOngoing cost of supplies to support the system(paper/user PC, ect)7OthersOther expensive not list above5SIMILAR to Problem and Exercise question 11. This SAME IDEA, but totally different numbers. USE THE NUMBERS BELOW!! Assuming monetary benefits of an information system at $95,000 per year, one-time costs of $75,000, recurring costs of $50,000 per year, a discount rate of 9 percent,and a five-year time horizon, calculate the netpresent value of these costs and benefits of an information system. Also calculate the overall return on investment of the project and then present a break-even analysis. At what point does break-even occur? This question is worth 25% of the assignment.NOTE THE CHANGES TO THE PROBLEM IN THE TEXT ABOVE IN BOLD TEXTSome helpful pointers:a.Fill in the chart provided (some answers already given to you) – the chart is on the next page. You must provide answers for all of the fields in the table filled in orange. b.Calculate the discount rate using the formula rate = 1/(1 + i)nwhere i is the rate, so percent = 0.09and n = the years, so, for example, in the third year, n would be that expression cubed (to the third power). Discount rate results should be FIVE decimal places, such as 0.85430 (not one of the answers).c.You don’t need to include the decimal places in your monetary answers.d.Overall ROI and break-even fraction should beTHREEdecimal places, such as 0.743 (of a year – also not one of the answers)d.Give your break-even point in terms of decimal places, and then compute that in months below the chart. So, for example, if your break-even date comes in between year oneand two, say, at .321, then it would be at 1.321 years. This computes to one year and3.852 months. (of course, this is not the answer). So you need to express your answer as BOTH a decimal(1.321 years) AND the number of years and months(1 year, 3.852 months). DO NOT just express your answer in terms of one or the other,express it in terms of BOTH.e.Even if your Overall ROI computes to a negative percent, express it as a positive percent9 .5
WBIT 3110, Unit 2 HWYear 0Year 1Year 2Year 3Year 4Year 5TotalsNet Economic$0 $95,000 $95,000 $95,000 $95,000 $95,000 BenefitDiscount Rate (.09)10.917430.841680.772180.708430.64993PV of Benefits$0 87,155.8579,959.6073,357.1067,300.8561,743.35NPV of all Benefits$0 87,155.85167,114.45240,471.55307,772.40369,515.75369,515.75One-time Costs($75,000.00)Recurring Costs$0 ($50,000)($50,000)($50,000)($50,000)($50,000)Discount Rate (.09)10.917430.841680.772180.708430.64993PV of Recurring$0 45,871.5042,084.0038,609.0035,421.5032,496.50CostsNPV of all Costs($75,000)120,871.50162,955.50201,564.50236,968.00269,482.50269,482.50Overall NPV100,033.250.56Overall ROI0.37Break-even Analysis