
Concept explainers
a.
Explanation of Solution
Project initiation and focus for the new system:
- The initiation for the project is done by a group of business people, high level managers, and committees of organization and so on.
- All these people help to complete the project in an efficient manner.
- There are three main focuses for the development of a new
information system as follows:- People who are involved in the project such as team members or high...
b.
Explanation of Solution
Modified economic feasibility analysis for customer tracking system:
Monetary benefits of an information system = $50,000 per year.
One-time costs = $47,500
Recurring cost = $32,000 per year.
Discount rate = 10%
Time period = 5 years
Present value for benefits and costs can be calculated by using the formula:
Here, PVn is the present value and i is the discount rate.
Present value (PV) calculation for benefits:
Benefits starts from year 1, hence calculation of present value starts from year 1.
Net Present Value (NPV) for benefits:
Present Value (PV) for costs:
c.
Explanation of Solution
Modified Economic Feasibility Analysis for Customer Tracking System at discount rate(12%):
Monetary benefits of an information system = $50,000 per year.
One-time costs = $47,500
Recurring cost = $32,000 per year.
Discount rate = 12%
Time period = 5 years
Present value for benefits and costs can be calculated by using the formula:
Here PVn is the present value and i is the discount rate.
Present value (PV) calculation for benefits:
Benefits starts from year 1, hence calculation of present value starts from year 1.
Net Present Value (NPV) for benefits:
Present Value (PV) for costs:
Net Present Value (NPV) for costs:
Overall Return on Investment (ROI):
Overall return on investment can be calculated as:
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.
- The overall NPV cash flow is total cash flow of the preceding years.
- After determining NPV yearly cash flows, it is found that break even occurs between years three and four
d.
Explanation of Solution
Online stores that sell business furniture:
- Two online stores that sell business furniture are “Furniture world” and “Style Spa”.
- These online stores consist of a website which has all the furniture’s that are available in the store...

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Chapter 4 Solutions
Essentials of Systems Analysis and Design (6th Edition)
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