Question: Please answer the following. Will be sure to upvote! 5. Martin is working to develop a cost-beneft feasibility aralysis for a new client-server system. He
5. Martin is working to develop a cost-beneft feasibility aralysis for a new client-server system. He has identified a number of cost factors and values for the new system, summarized in the following tables: Development Costs-Training 4 Oracle training registration $3500 leach student Annual Operating Costs-Hardware, Software, and Mise. 1 Maintenance agreement for senver 5996 leach agreement 1 Maintenance agreement for server $525 leach agreement DBMS software Preprinted forms 15,000 forms each year \& 5.22 /each form 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 $45.000 in the first year of the system's operation and wil grow at a tate of 10t4 each year therealter. Savings from lower inventory levels are expected to be $15,000 per year for each year of the project s ife. Using a format similar to the spreadsheets in this chapter, develop a spreadsheet that summarizes this project's cash flow, assuming a four-year useful lfe after the project is developed. That is, assume that the project is implemented in 2018, the system will be used between 2019 and 2022. Compute the present value of the cash fows, using an interest rate of 9%. (1) What is the NPV for this project? (10 points) (2) What is the ROI for this project? (10 points) (3) What is the break-even point? (10 points) (4) Should this project be accepted by the acproval commitee? Why? (15 points) 5. Martin is working to develop a cost-benefit feasibility analysis for a new chent-server system. He has identifed a number of cost factors and values for the new system, summarized in the following tables: Development Costs - Training 4 Oracle training registration $3500 leach student Development Costs-New Hardware and Software Annual Operating Costs-Hardware, Software, and Mise. 1 Maintenance agreement for server 5995/each agreement 1 Maintenance agreement for server $525/ each agreement DBMS sofware Preprinted forms 15.000 iorms each year (i) 5.22 leach form 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 $45,000 in the frst 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 ife. Using a format similar to the spreadsheets in this chapter, develop a spreadsheet that summarizes this project's cash flow, assuming a four-year useful life after the project is developed. That is, assume that the project is implemented in 2018, the system will be used between 2019 and 2022. Compute the present value of the cash flows, using an interest rate of 9%. (1) What is the NPV for this project? (10 points) (2) What is the ROI for this project? (10 points) (3) What is the break-even point? (10 points) (4) Should this project be accepted by the approval committee? Why? (15 points)
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