A new IS project has been proposed that will produce not only cost savings but also an
Question:
A new IS project has been proposed that will produce not only cost savings but also an increase in revenue. The initial costs to establish the system are estimated to be $500,000. The remaining cash flow data is presented in the following table.
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a. Using a spreadsheet program, calculate the return on investment (ROI) for this project. Assume that the cost of capital is 7 percent.
b. How would the rate of return change if the project delivered $50,000 in additional revenue and generated cost savings of $25,000 in the first year?
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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a Initial spreadsheet with ROI All amount in thousands b Additional ...View the full answer
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Related Book For 
Principles of Information Systems
ISBN: 978-0324665284
9th edition
Authors: Ralph M. Stair, George W. Reynolds
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