Scribd Logo
Upload

Welcome to Scribd!

  • Economic Feasibility: Assignment 1

    Uploaded by

    DrMohamed Mansour
    35 views1 page
    This document provides details for Assignment 1 of an economic feasibility study. It outlines that a new computer system costing $10,000 with $77,500 in development costs will not be operational until Year 1. It is estimated to increase annual sales by $50,000 and reduce inventory costs by $14,000 starting in Year 1. These benefits will increase by $3,000 each year through Year 4. Additional annual costs of $23,000 for licensing and supplies and $12,000 for initial personnel are also provided, with personnel costs increasing 4% each year. The discount rate is 7% and the assignment is to determine the break-even point, ROI over 5 years, and maximum initial personnel costs for a

    Original Description:

    Project management

    Original Title

    a1

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document provides details for Assignment 1 of an economic feasibility study. It outlines that a new computer system costing $10,000 with $77,500 in development costs will not be operational until Year 1. It is estimated to increase annual sales by $50,000 and reduce inventory costs by $14,000 starting in Year 1. These benefits will increase by $3,000 each year through Year 4. Additional annual costs of $23,000 for licensing and supplies and $12,000 for initial personnel are also provided, with personnel costs increasing 4% each year. The discount rate is 7% and the assignment is to determine the break-even point, ROI over 5 years, and maximum initial personnel costs for a

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    35 views1 page

    Economic Feasibility: Assignment 1

    Uploaded by

    DrMohamed Mansour
    This document provides details for Assignment 1 of an economic feasibility study. It outlines that a new computer system costing $10,000 with $77,500 in development costs will not be operational until Year 1. It is estimated to increase annual sales by $50,000 and reduce inventory costs by $14,000 starting in Year 1. These benefits will increase by $3,000 each year through Year 4. Additional annual costs of $23,000 for licensing and supplies and $12,000 for initial personnel are also provided, with personnel costs increasing 4% each year. The discount rate is 7% and the assignment is to determine the break-even point, ROI over 5 years, and maximum initial personnel costs for a

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    I S 460 Assignments Professor Yong Tan

    Assignment 1

    Economic Feasibility

    You are asked to conduct a five-year (Year 0 to Year 4) economic feasibility study. Based on project
    schedule, you conclude that the system will not be in operation during the current year (Year 0).
    Once the system is operational in the following year (i.e. Year 1), you expect annual increased sales
    of $50,000 and inventory cost reduction of $14,000. You also estimate that the system benefit will
    increase $3,000 annually (from the previous year) from Year 2 through Year 4.

    New computer costs $10,000 and the development cost is estimated at $77,500. The software license
    renewal and supplies will be $23,000 annually from Year 1 on. The initial personnel cost (incurred in
    Year 1) for hiring and training operators is $12,000, which will increase annually at a rate of 4%
    thereafter.

    ƒ The discount rate is 7%. Is there a break-even point in the five-year time horizon? If so,
    when? What is the ROI for the project?
    ƒ Use the Goal Seek function or Solver from the Excel Tools menu, find out up to how high
    the initial personnel cost can be so that the NPV still remains positive.

    You might also like