Feasibility Study for a New Software Project

Your CEO has asked you as a systems analyst to conduct a feasibility study for a new software project that will help reduce costs, reduce errors, improve overall flexibility, provide an ease of interacting with business partners, increase the speed of transaction activity, and improve overall management planning control. You have received the following data regarding the tangible benefits and associated costs for this proposed project:

Cost Benefit Analysis Data

Tangible Benefits $($Yearly$)$:

Cost reduction or avoidance

$$12,500$

Error reduction

$$3,500$

Increased Flexibility

$$5,500$

Increased speed of activity

$$7,500$

Improvement management$/$planning control

$$15,000$

Ease of interfacing with business partners

$$16,000$

Total Tangible Benefits

$$60,000$

One Time Cost $($Initial Investment$)$:

Development Costs

$$2,000$

New Hardware

$$1,000$

Software License or Purchase cost

$$19,500$

User Training

$$3,500$

Site Preparation

$$4,000$

Total One Time Cost

$$30,000$

Recurring Cost $($Yearly$)$:

Software Maintenance

$$2,500$

Incremental Data Storage

$$2,500$

Communications

$$9,000$

Supplies

$$7,000$

Other

$$4,000$

Total Recurring Cost

$$25,000$