You are responsible for doing an NPV, ROI and Break-even analysis for the New Parking Meter...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are responsible for doing an NPV, ROI and Break-even analysis for the New Parking Meter information system project. The information system has a projected lifespan of 6 years. Assume estimated monetary benefits for the system of $3m in the first year (i.e. year 1, the year after the current year, which is year 0), with those benefits increasing by $1m a year for the next 3 years and then decreasing $2m a year for the remainder. One-time development and procurement costs are $4m in the current year (year 0) and recurring costs (beginning in year 1) are estimated to start at $1m a year and increase by 5.8% per year over the duration of the system's scheduled life. The discount rate the company concerned uses is 4 percent. This project is using new technology and involves a community currently uses manual processes (coin operated meters). As a result the project is regarded as high risk. Note that a spreadsheet is ideal for working out the answer to a question like this. You can find such a spreadsheet on the course website. You are not assessed on your ability to do maths, many of the calculations are done in formulas, so just fill in the shaded cells for discount rate, benefits and costs. Complete the spreadsheet to calculate the net present value, return on investment and present a break-even analysis for the proposed information system. Think carefully about how to present this information within the single file you submit (e.g. copy and paste the chart to show BEA but still include discussion to explain figures). You are responsible for doing an NPV, ROI and Break-even analysis for the New Parking Meter information system project. The information system has a projected lifespan of 6 years. Assume estimated monetary benefits for the system of $3m in the first year (i.e. year 1, the year after the current year, which is year 0), with those benefits increasing by $1m a year for the next 3 years and then decreasing $2m a year for the remainder. One-time development and procurement costs are $4m in the current year (year 0) and recurring costs (beginning in year 1) are estimated to start at $1m a year and increase by 5.8% per year over the duration of the system's scheduled life. The discount rate the company concerned uses is 4 percent. This project is using new technology and involves a community currently uses manual processes (coin operated meters). As a result the project is regarded as high risk. Note that a spreadsheet is ideal for working out the answer to a question like this. You can find such a spreadsheet on the course website. You are not assessed on your ability to do maths, many of the calculations are done in formulas, so just fill in the shaded cells for discount rate, benefits and costs. Complete the spreadsheet to calculate the net present value, return on investment and present a break-even analysis for the proposed information system. Think carefully about how to present this information within the single file you submit (e.g. copy and paste the chart to show BEA but still include discussion to explain figures).
Expert Answer:
Answer rating: 100% (QA)
A Net Present Value B Return On Investment C Breakeven Analysis While calculating Br... View the full answer
Related Book For
College Accounting
ISBN: 978-1111528126
11th edition
Authors: Tracie Nobles, Cathy Scott, Douglas McQuaig, Patricia Bille
Posted Date:
Students also viewed these accounting questions
-
As Beacon Company controller, you are responsible for informing the board of directors about its financial activities. At the board meeting, you present the following information. After the meeting,...
-
As an analyst for FinCorp Inc., you are responsible for many firms, including ADFC. Currently you have a hold recommendation on ADFC.18 the current price of ADFC is $140. You have conducted an...
-
In this hypothetical situation, you are responsible for shipping material that is measured as volumetric cargo - CBM, which stands for Cubic Meter, to be calculated as length X width X height. Also...
-
1. How far can an economist contribute to this normative debate over the desirability of an excise tax? 2. What is the excess burden of a lump-sum tax? (For a clue, see Figure 12.14.)
-
As part of a study of risk factors for stroke, 155 women who had experienced a hemorrhagic stroke (eases) were interviewed. For each case, a control was chosen who had not experienced a stroke; the...
-
What types of properties do nonferrous metals possess that are not available in the ferrous metals?
-
Discuss the types of discrimination that occur in the workplace.
-
1. What is the benefit to Jamie Lee and Ross investing in a companys IPO? Will they be guaranteed a large return from this investment? At this life stage, would you recommend that Jamie Lee and Ross...
-
Shandra has collected data about how the price of a used Volkswagon Golf decreases as the Volkswagon Golf ages. Shandra would like to use a trendline to predict the price of a used Volkswagon Golf...
-
The following is a cross-tabulation of whether respondents rent or own their home by social class for a sample of 240 heads of household: a. Which is the independent variable and which is the...
-
The US and indeed the entire global financial system are slowly entering, or so it seems, a period of strife and economic conflict after nearly a decade of record or near record growth. In the US and...
-
1. Explain why all costs are controllable by someone at some point, but in the short run, some costs may be classified as noncontrollable. 2. What does it mean to have a favorable variance? 3. What...
-
Answer the following questions: 1. Prepare a list of any four (4) methods of extending and developing individual creative thinking skills. 2. Identify and document two (2) tools you can use to extend...
-
What was the most difficult aspect of conducting the group for you? Which skills came to you most naturally? Which were least natural? How do you feel your own group leadership skills compare to the...
-
My topic is domestic violence for my paper. What have you found in your research of your topic (please state topic again in your reply) that has surprised you? Provide what kind of reform you are...
-
A. What is vicarious liability? What is the reasoning behind holding employers accountable in this way? What are the criteria that determine whether or not vicarious liability will attach? B. Give an...
-
please find 8-10 sources about the following topics -monetary policy -fiscal policy -supply-side policy -inflation -how inflation has been tackled in the past? -Applications in banks for monetary,...
-
Southwestern Punch was made by Frutayuda, Inc. and sold in 12-ounce cans to benefit victims of Hurricane Zero. The mean number of ounces placed in a can by an automatic fill pump is 11.7 with a...
-
Describe the difference between a small stock dividend and a stock split.
-
In October, A. Nguyen established an apartment rental service. The account headings are presented below. Transactions completed during the month of October follow. a. Nguyen deposited $ 25,000 in a...
-
You are an owner / bookkeeper in a country whose economy has been nearly destroyed. Goods are scarce; in fact, you have no goods to sell at the start of each day. You go out early each morning to...
-
Consider the following time series data. a. Construct a time series plot. What type of pattern exists in the data? b. Show the four-quarter and centered moving average values for this time series. c....
-
Refer to exercise 35. a. Deseasonalize the time series using the adjusted seasonal indexes computed in part (c) of exercise 35. b. Using Minitab or Excel, compute the linear trend regression equation...
-
The following table reports prices and usage quantities for two items in 2009 and 2011. a. Compute price relatives for each item in 2011 using 2009 as the base period. b. Compute an unweighted...
Study smarter with the SolutionInn App