Please original workSoftware project decision pointDetermine an interest rate to use—select an interest rate and why you think this number should be used. Use it in your calculations below in question. Given the information below on options 1 and 2, carry out three forms of analysis: breakeven, ROI, and NPV.Make a recommendation on which way to proceed, based on the TCO for each option.Option 1: Purchase the FunSoft package: Cost $200,000 for software and $85,000 for hardware in year one; with $50,000 to customize it and a $40,000 annual licensing fee for the life of the contract. There will be an annual saving of $61,000 due to the layoff of a clerk.• Option 2: Purchase the SoftComm package, which will operate on the vendor’s hardware: Cost $250,000 for a five-year license, payable half up front and half during the first year of implementation. The maintenance contract, at $75,000 a year, includes all currently identified modifications to the software for the first three years. The clerk’s hours will be cut by half, for a saving of $25,000 a year.Assume a five-year life for the software.Please include 2 references (in text citation)

IntroductionWhen making decisions about software investments, it's crucial to conduct a thorough…

Answered: Please original work Software project…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Please original work

Software project decision point

Determine an interest rate to use—select an interest rate and why you think this number should be used. Use it in your calculations below in question.

Given the information below on options 1 and 2, carry out three forms of analysis: breakeven, ROI, and NPV.

Make a recommendation on which way to proceed, based on the TCO for each option.

Option 1: Purchase the FunSoft package: Cost $200,000 for software and $85,000 for hardware in year one; with $50,000 to customize it and a $40,000 annual licensing fee for the life of the contract. There will be an annual saving of $61,000 due to the layoff of a clerk.

• Option 2: Purchase the SoftComm package, which will operate on the vendor’s hardware: Cost $250,000 for a five-year license, payable half up front and half during the first year of implementation. The maintenance contract, at $75,000 a year, includes all currently identified modifications to the software for the first three years. The clerk’s hours will be cut by half, for a saving of $25,000 a year.

Assume a five-year life for the software.

Please include 2 references (in text citation)

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