You are working to develop a preliminary cost-benefit analysis for a new client-server system. You have identified a number of cost factors and values for the new system, summarized in the following table.The benefits of the system are expected to come from two source: 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.

1. Using a format similar to that shown in the book, develop a spreadsheet that summarizes this project’s cash flow, assuming a four-year useful life after the project is developed. Then answer the following questions.
2. What is the net present value for this project?
3. What is the payback period for this project? Show a graph that illustrates the payback period.
4. Based on your analysis, would you recommend this project be accepted? Explain your response.

Development costs - Personnel 2 Systems Analysts 4 Developers 1 UI/UX Designer 1 Database Specialist Development Costs - Training 4 Oracle training registration fees 400 hours/each @ $50/hour 250 hours/each @ $35/hour 200 hours/each @ $40/hour 15 hours/each @ $45/hour $83,675 $3,500 student $ Development Costs - New hardware and software 1 Development server 1 Server software (OS, misc) $18,700 $1,500 1 DBMS server software 7 DBMS client software Annual Operating Costs - Personnel 2 Programmer Analysts 1 System Administrator $7,500 $950/client 125 hours/each @ 35/hour 20 hours/each @ $25/hour Annual Operating Costs - Hardware, Software, and Misc. 1 maintenance agreement for server 1 maintenance agreement for server DBMS software Preprinted forms $995 $525 15,000/year @ $.22/form