ABCD is an established tuition center that has several branches in Johor Bahru. Recently, the top...
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ABCD is an established tuition center that has several branches in Johor Bahru. Recently, the top management has decided to consider an information system to help their growing business. You have been hired as the system analyst to handle the project. Before continuing with the development of the project, you need to assess the economic feasibility from the budget that the company plans to invest. Table 1 shows the information given by the company. Table 1: Estimated cost and expected benefits for ABCD Expected Benefits: Estimated Costs: Hardware Software Stationeries Salary Assumptions: RM 20,000 RM 10,000 RM 5,000 RM 30,000 Savings Increase sales Motivation Course Discount rate 15% Sensitivity factor (cost) 0.5 Sensitivity factor (benefit) 0.9 Annual increment (costs) 5% Annual increment (benefit) 15% RM 2,000 per month RM 25,000 RM 10,000 (a) Calculate the cost-benefit estimation using the Present Value (PV) analysis (for 3 years) to assess the economic feasibility for the ABCD project proposal. (b) What is the PI value for this PV analysis? What is your recommendation based on the PI value and justify it. ABCD is an established tuition center that has several branches in Johor Bahru. Recently, the top management has decided to consider an information system to help their growing business. You have been hired as the system analyst to handle the project. Before continuing with the development of the project, you need to assess the economic feasibility from the budget that the company plans to invest. Table 1 shows the information given by the company. Table 1: Estimated cost and expected benefits for ABCD Expected Benefits: Estimated Costs: Hardware Software Stationeries Salary Assumptions: RM 20,000 RM 10,000 RM 5,000 RM 30,000 Savings Increase sales Motivation Course Discount rate 15% Sensitivity factor (cost) 0.5 Sensitivity factor (benefit) 0.9 Annual increment (costs) 5% Annual increment (benefit) 15% RM 2,000 per month RM 25,000 RM 10,000 (a) Calculate the cost-benefit estimation using the Present Value (PV) analysis (for 3 years) to assess the economic feasibility for the ABCD project proposal. (b) What is the PI value for this PV analysis? What is your recommendation based on the PI value and justify it.
Expert Answer:
Answer rating: 100% (QA)
a Calculate the NPV for each year Year 1 Costs RM 20000 Benefits RM 2000 per month 12 months RM 2400... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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