Question

Assuming monetary benefits of an information system at $150 at Year 1, $200 at Year 2, and $250 at Year 3, one-time costs of $200, recurring costs of $50 per year, a discount rate of 7 percent, and a three-year time horizon, please fill in the cost-analysis benefit table below. Please round each value to 2 decimal places (which indicates that you should keep at least 3 decimal places for intermediate calculations). Each blank between (1) and (23) is worth 0.25 point, while blank (24) is worth 0.75 point.

	Year 0	Year 1	Year 2	Year 3
Benefit	$0	$150	$200	$250
PV of Benefit	$0	(1)	(2)	(3)
NPV of all benefits	$0	(4)	(5)	(6)
One-time Cost	-$200	N/A	N/A	N/A
Recurring Cost	$0	$-50	$-50	$-50
PV of Recurring Cost	$0	(7)	(8)	(9)
NPV of all costs	(10)	(11)	(12)	(13)
Overall NPV	(14)
ROI	(15)
Yearly NPV cash flow	(16)	(17)	(18)	(19)
NPV Cash Flow	(20)	(21)	(22)	(23)
Break-Even Point	(24)

Answer 1

The calculations are shown below along with the explanation given in column 2- reference :-

Particulars	Reference	Year 0	Year 1	Year 2	Year 3
Benefit	a	$0	$150	$200	$250
PVF	b	1	0.935	0.873	0.816
PV of Benefit	c=a*b	$0	$140.19	$174.69	$204.07
NPV of all benefits	d = Cumulative total of current & remaining years	$519	$518.95	$378.76	$204.07
One-time Cost	e	($200)	0	0	0
Recurring Cost	f	$0	($50)	($50)	($50)
PV of Recurring Cost	g=b*f	$0	($47)	($44)	($41)
NPV of all costs	h= Cumulative total of current & remaining years	($331)	($131)	($84)	($41)
Overall NPV	i = (d+h)	$188	-	-	-
ROI	j = i/h	56.68%	-	-	-
Yearly NPV cash flow	k= c+e+g	($200)	$93	$131	$163
NPV Cash Flow	L = d+h	$188	$388	$294	$163
Break-Even Point	m = h	($331)	-	-	-

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