afAALTERNATIVE SOLUTION: 2.

ANSWER: STATEMENT SHOWING COMPARATIVE COST FOR 4 YEARS :

PARTICULARS

KOLKATA RS.

BANGALORE RS.

CHENNAI RS.

1. Rent of office space: KOLKATA: (1,900X50X100) BANGALORE:(2,500X50X100) CHENNAI: (1,800X50X100) 2. Accomodation-Rent: KOLKATA: (6000X1250) BANGALORE: (7500X1250) CHENNA : (7000X1250) 3. Transportation cost: KOLKATA: (18,000X12) BANGALORE: (24,000X12) CHENNAI: (22,000X12) 4. Annual electricity: 5. Annual water charges: 4,80,000 30,000 5,30,000 26,000 2,16,000 2,88,000 2,64,000 5,40,000 20,000 36,00,000 45,00,000 42,00,000 95,00,000 1,25,00,000 90,00,000

ANNUAL COST (i) Cost for 4 years: (i) x 4 Add: Set up cost for 4 yrs KOLKATA : (240X50X100) BANGALORE:(700X50X100) CHENNAI : (340X50X100)

1,38,26,000 5,53,04,000

1,78,44,000 7,13,76,000

1,40,24,000 5,60,96,000

12,00,000 35,00,000 17,00,000 5,65,04,000 7,48,76,000 20,80,000 5,77,96,000 24,00,000

Add:Internet link sharing cost for 4 years : Total comparative cost for 4 years :

18,00,000

5,83,04,000

7,69,56,000

6,01,96,000

NOTE:
A. In this problem we are not considering the following costs: 1.Purchase cost of computer. 2.Purchase cost of additional equipment. 3.Salary of employees. 4.Telephone charges. 5.Fees of Indian consultancy firms. As it is a comparative cost calculation, the above stated items which are at par irrespective of locations(alternatives).

B. NOTE ON APARTMENT(S):
Apartment (plural apartments) means1. A complete domicile occupying only part of a building. 2. Any room in a building, usually one of several forming a suite, and well furnished and used as living accommodation, offices, etc.

ASSUMPTION

Thus, we assume that here in the problem per apartment means one apartment is allotted for one employee. Therefore 50 apartments will be allotted to 50 employees..............

COMMENT: As total cost for 4 years at Kolkata is much lesser than Chennai and Bangalore, company should locate its new development centre at Kolkata assuming company is rational about its cost effectiveness and cost control.