Question: assume monetary benefits of an information system of 50000 the...
Assume monetary benefits of an information system of $50,000 the first year and
increasing benefits of $5,000 a year for the next four years (year 1 = 50,000; year 2-
55,000; year 3 = 60,000; year 4 = 65,000; year 5 – 70,000). One-time development
costs were $90,000 and recurring costs beginning in year 1 were $40,000 over the
duration of the system’s life. The discount rate for the company was 10 percent.
Using a 5-year horizon, calculate the net present value of these costs and
benefits. Also calculate the overall return on investment of the project and then
present a break-even analysis. At what point does break-even occur?
1. Prepare a worksheet (in MS Excel) for the economic analysis. Choose
appropriate format for the worksheet. Use currency symbols for the numbers
indicating monetary values. You must use formula (MS Excel) for your
calculations in the worksheet.