Appendix $1$A: Detailed Economic Feasibility Analysis for Dr$$nTeq

$35$

Annual Operating Costs$-$

Personnel

$2$ Programmer Analysts

$1$ System Librarian

$125$ hours$/$ea @ $$35/$hour

$20$ hours$/$ea@$$15/$hour

Annual Operating Costs$-$

Hardware, Software, and Misc.

$1$ Maintenance agreement $$995$

for server

$1$ Maintenance agreement $$525$

for server

DBMS software

Preprinted forms

The benefits of the new system are expected to come from two sources: increased sales and lower inventory levels. Sales are expected to increase by $$30,000$ in the first year of the system's operation and will grow at a rate of $10\%$ each year thereafter. Savings from lower inventory levels are expected to be $$15,000$ per year for each year of the project's life.

Using a format like the spreadsheets in this chapter, develop a spreadsheet that summarizes this project's cash flow, assuming a $4-$year useful life after the project is developed. Compute the present value of the cash flows, using an interest rate of $9\%.$

What is the NPV for this project? What is the ROI for this project? What is the break$-$even point? Should this project be accepted by the approval committee?

Martin is working to develop a preliminary cost$-$benefit analysis for a new client$-$server system. He has identified several cost factors and values for the new system, summarized in the following tables:

Development Costs$-$Personnel

$2$ Systems Analysts

$4$ Programmer Analysts

$1$ GUI Designer

$1$ Telecommunications Specialist

$1$ System Architect

$1$ Database Specialist

$1$ System Librarian

Development Costs$-$Training

$4$ Oracle training registration

Development Costs$-$New

Hardware and Software

$1$ Development server

$1$ Server software $($OS$,$ misc.$)$

$1$ DBMS server software

$7$ DBMS client software

$400$ hours$/$ea @ $$50/$hour

$250$ hours$/$ea @ $$35/$hour

$200$ hours$/$ea @ $$40/$hour

$50$ hours$/$ea @ $$50/$hour

$100$ hours$/$ea @ $$50/$hour

$15$ hours$/$ea @ $$45/$hour

$250$ hours$/$ea @ $$15/$hour

$$3,\frac{500}{?}$ student

$$18,700$

$$1,500$

$$7,500$

$$\frac{950}{?}$ client