Given 1: Cost and Benefit Schedule

Given 2: The Cost of the Existing System

Presented above are the cost and benefit schedule and the cost of the existing system. With the proposed ERP System for BUIAMA Corporation, determine the following:

Assumptions:

1. In the calculation of BEP, Payback Period, NPV, and NPV2, maintenance cost is a separate account.
2. In determining the NPV, the discount rate is 10%.
3. In determining the NPV2, the net benefits discount rate is 12% and net cost discount rate is 12%.

Requirements and Marking Scheme:

1. Break-Even Point
2. Payback Period
3. Cost-Benefit Analysis Using Present Value (for Purchasing Operations Support)
4. Cost-Benefit Analysis Using Present Value (Economic Feasibility Analysis for an ERP System Project)
5. Make an analysis of the results derived for each requirement.

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 In ED 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 3,500.00 4,000.00 4,500.00 5,000.00 6,000.00 7,500.00 7,600.00 7,700.00 7,800.00 7,900.00 10,000.00 10,100.00 10,200.00 10,300.00 10,400.00 20,000.00 21,000.00 22,000.00 23,000.00 24,000.00 2,000.00 2,500.00 3,000.00 3,500.00 4,000.00 48,000.00 51,200.00 54,400.00 57,600.00 61,300.00 In BD Tangible Benefits Category Cost reduction or avoidance Error reduction Increased fexibility Increased speed of activity Improvement in management planning and control Other Total Tangible Benefits Tangible One-Time Costs Category Development costs New hardware New sotware User training Site preparation Other Total Tangible One-Time Costs Tangible Recurring Costs Category Application sotware maintenance Incremental data storage required Incremental communications New sotware or hardware leases Supplies Total Tangible Recurring Costs 25,000.00 15,000.00 10,000.00 2,500.00 500.00 500.00 53,500.00 In BD 10,000.00 10,500.00 1,000.00 11,500.00 12,000.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000 00 2,000.00 2.250.00 2,500.00 2.750.00 3,000.00 1,000.00 1,500.00 2,000.00 2,500.00 500.00 500.00 500.00 500.00 500.00 13,500.00 15,750.00 17,500.00 19,250.00 21,000.00 Costs of Existing System Development costs Additional hardware Additional software Operation costs User time during development Maintenance costs Total Cost of Existing System Year 1 Year 2 Year 3 Year 4 Year 5 30,000.00 3,000.00 1,000.00 1,500.00 2,000.00 2,500.00 3,500.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 15,000.00 15,500.00 16,000.00 16,500.00 17,000.00 66,500.00 32,500.00 34,500.00 36,500.00 38,500.00