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    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 5-year time horizon, calculate the net present value of these costs and benefits of an information system. Also calculate the overall return an investment of the project and then present a break-even analysis. At what point does break-even occur?

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    Solution Preview

    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 5-year time horizon, calculate the net present value of these costs and benefits of an information system. Also calculate the overall return an investment of the project and then present a break-even analysis. At what point does break-even occur?

    Year 0 1 2 3 4 5
    I. Investment Outlay
    1. Capital Investments -75,000
    2. Total net investment -75,000

    II. Operating Cashflows over the Project's time ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate the overall return an investment of the project and then present a break-even analysis and answer at what point does break-even occur.

    $2.19