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This document contains questions about calculating the net present value, return on investment, and break-even point of an information system project with one-time costs of $75,000, recurring costs of $35,000 per year, and annual monetary benefits of $85,000 over a 5 year period using a 12% discount rate. It also asks to describe the three commonly used methods for performing economic cost-benefit analysis and the concept of time value of money and how the discount rate affects the value of money over time.

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Saimunur Rahman
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99 views

Assignment

This document contains questions about calculating the net present value, return on investment, and break-even point of an information system project with one-time costs of $75,000, recurring costs of $35,000 per year, and annual monetary benefits of $85,000 over a 5 year period using a 12% discount rate. It also asks to describe the three commonly used methods for performing economic cost-benefit analysis and the concept of time value of money and how the discount rate affects the value of money over time.

Uploaded by

Saimunur Rahman
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
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International Islamic University Chittagong

Dept. of Computer Science & Engineering 6th Semester Performance Test (Assignment) CSE 3607 System Analysis and Design Marks: 10 Date: 10-6-2011
1. Assuming monetary benefits of an information system at $85,000 per year, one-time costs of $75,000, recurring costs of $35,000 per year, a discount rate of 12 percent, and a five-year time horizon, calculate the Net Present Value of these costs and benefits of an information system. Also calculate the overall Return on Investment of the project and then present a Break-Even Analysis. At what point does break-even occur?

Year 0 Net Economic Benefit Discount Rate PV of Benefits NPV of all Benefits One-Time Costs Recurring Costs Discount Rate PV of Recurring Costs NPV of all Costs Overall NPV Overall ROI Break-even Analysis Yearly NPV Cash Flow Overall NPV Cash Flow

Year 1

Year 2

Year 3

Year 4

Year 5

Totals

2. Describe the three commonly used methods for performing economic cost-benefit analysis.

3. Describe the concept of the time value of money. How does the discount rate affect the value of $1 today versus one year from today?

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