Economic feasibility analysis of an information system : Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6). One-time costs = $80,000 Recurring cost = $40,000 per year. Discount rate = 11% Time period = 6 years

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Answer 1

Question

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

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Answer 2

Question

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Answer 6

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Answer 7

Chapter 4, Problem 24PE

Program Plan Intro

Economic feasibility analysis of an information system:

Monetary benefits of an information system = ($40,000 for year 1), ($50,000 for year 2), ($60,000 for year 3), ($70,000 for year 4), ($80,000 for year 5), ($90,000 for year 6).

One-time costs = $80,000

Recurring cost = $40,000 per year.

Discount rate = 11%

Time period = 6 years

Answer 8

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Answer 9

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Answer 10

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Answer 11

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4 - Prob. 1M Ch. 4 - Prob. 2M Ch. 4 - Prob. 3M Ch. 4 - Prob. 4M Ch. 4 - Prob. 5M Ch. 4 - Prob. 6M Ch. 4 - Prob. 7M Ch. 4 - Prob. 8M Ch. 4 - Prob. 9M Ch. 4 - Prob. 10M

Solution Summary: The author explains the economic feasibility analysis of an information system: Monetary benefits, one-time costs, and recurring costs.

Explanation of Solution

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Want to see the full answer?

Chapter 4 Solutions

Solution Summary: The author explains the economic feasibility analysis of an information system: Monetary benefits, one-time costs, and recurring costs.

Explanation of Solution

Overall Return on Investment (ROI): Overall return on investment can be calculated as: Overall ROI = (Overall NPV / NPV of all costs) Overall NPV = (NPV of all benefits – NPV of all costs) �

Explanation of Solution

Break-Even Analysis (BEA): Break even analysis is carried out by determining NPV of yearly cash flows. The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...

Want to see the full answer?

Chapter 4 Solutions

Overall Return on Investment (ROI):

Overall return on investment can be calculated as:

Overall ROI = (Overall NPV / NPV of all costs)

Overall NPV = (NPV of all benefits – NPV of all costs) �

Break-Even Analysis (BEA):

Break even analysis is carried out by determining NPV of yearly cash flows.

The yearly cash flows are calculated by subtracting present values of recurring costs from the present value of yearly benefits...