Q.

1 Solution

Old System - Service Bureau A year for Service Bureau $285,000 (10% of net income) From next year to $315,000 New System(home base) Purchases $ 184,000 Software Training & Conversion $ 65,000 Salary ($ 23,000 x 12) x5 + (30/100 x 23,000 x 12) x5 $1,380,000 + $ 414,000 = $ 1,794,000 Monthly Maintenance = ($1850 x 12) = $ 111,000 Cost of New System Salary $ 1,794,000 Purchase $ 184,000 Training $ 65,000 Maintenance $ 111,000 $2,154,000

Cost of lease (83,900 x 12) x 5 = 234,000 + $ 100 = $ 234,100 Cost of Old System Cost = $ 315,000 x 5 = $ 1,575,000 Service bureau would be most beneficial as there will be a saving of $579,000 which will be obtained from cost of new system minus the cost of old system($2,154,000-$1575000) Bank should

Q.2 Solution In Case of Acquiring New system Price of Hardware = $ 6,800 Per month 8 times 8 x $ 0.75 = $ 6 $ 6 x 12 = $ 72 p.a Cost Data Software = $ 800 + ( 15/100 x 800) = $ 920 Stationery = $ 300

(ii) Drawback Service bureau y Time delay/Time consuming y Inflexibility y Inconfidentiality y No control Own system y Expensive to maintain y Cost of training y Personal sales y It needs close supervision. Benefits Service Bureau y Its Cheap y No complications of recruitment of new staff for operating the system y NO maintenance fee y Saving and Own System y Assurance of Service y Confidentiality y Take short time to prepare Salary (iii) y y y y y y Time Confidentiality Effectiveness and efficiency Movements Employees morale New skills