Question

System Analysis and Design (IT243) Discussion Board 1 Purpose Use the most common analysis and design techniques with comfort. Topic of Discussion Assume you are hired by the XYZ company as Systems Analyst to prepare a cost-benefit analysis report for building an R&D laboratory for its staff with the following specifications: The company already have a large hall reserved for the purpose, meaning the owner will not have to rent the space. The lab will have ten computer spaces with a computer table and chair. Each computer space is to be equipped with a high-performance laptop, a headphone and a scanner. Each laptop will have an operating system (i.e. Microsoft Windows), word processing package (i.e. Microsoft Office 2016) and an antivirus (i.e. Kaspersky Antivirus) installed All the computers need to be connected with the internet (requiring the purchase of a router and internet connection from an Internet Service Provider) The laptops in the lab will share a heavy-duty printer available on the network This lab will be established in Year 0 and you have to calculate the cost of establishing it. You can use the e-commerce websites (e.g. Amazon Saudi Arabia, Jarir Book Store, Extra Store etc.) to gather the costs of each of the above-mentioned items to be purchased and thus estimate the total cost of establishing the lab (in SAR). Once the lab is operational, benefits and ongoing costs are projected over a period of three years according to the table shown below: Year 0Year 1Year 2Year 3TotalTotal Benefits25,00040,00062,000Total CostsTo be estimated10,00011,00017,000 Note: The cost of establishing the lab that you have already estimated (in SAR) for year zero is to be entered in the cell “To be estimated” in the table) Based on the information in the table above, calculate: The total benefits and total costs over the duration of three years. The return on investment (ROI) The break-even point (BEP)

Answer 1

As Per the question the cost of establishing the lab that is to be considered zero

Total Benefits =25000+40000+62000

=127000

Total cost =10000+11000+17000

=38000

Net Return on investment =89000

Cost =38000

ROI =89000/38000=234%

Break even point is when the Operating revenue is equal to the Fixed cost i.e Net profit is Zero