This is for MGMT 321 Systems Analysis and Design by Dennis Wixom and Roth 5th Edition
Create a cost-benefit analysis that illustrates the return on investment that you would receive from purchasing a computer. For assistance, you may visit computer-related Web sites (www.dell.com, www.hp.com) to view tangible costs that you can include in your analysis. Project the computer cost at $1,070.00. Include a three-year period of time and provide the net present value of the final total.
The following tips demonstrate how to create a Cost-Benefit Analysis for the Module 1 EOMQ Assignment1.3, Part 2:
Create a spreadsheet (MS Excel, Apache OpenOffice Calc). Refer to Figure 1-8 and Figure 1-9 in the textbook for examples of spreadsheet formatting. Note that Row "1" has "Years" beginning with "Year 0" and ending with "Year 3" moving across to the right followed by a"Total."
In Column 1 going down, you would first list the "Costs:" category that will be broken down into subparts below (unlike Figure 1-8 which has "Benefits" first). The "Costs" subparts would include such items as "Initial Purchase Costs" and "Ongoing Costs of Ownership," which in turn is broken down into subparts such as "Internet Access," "AntiVirus Subscription," "Computer Supplies," etc.
Next going down in Column 1, place "PV of Costs (Assuming a ___ % rate of return)." Decide on what Rate of Return" for your formulas you want and place in the blank space. Use the "Discounted Cash Flow Technique" to build your spreadsheet formulas as described on page 27 of the textbook. If you need help creating a formula for the spreadsheet cells, check out any of the following:
Next going down in Column 1, place "PV of All Costs."
Next going down Column 1 place the "Benefits:" category, which will be broken down into subparts similar to the "Costs:" category. The "Benefits" subparts would include such items as "Vehicle costs saved for having no travel to campus computer lab.
Next going down in Column 1, place "PV of Benefits (Assuming a ___ % rate of return)." Decide on what Rate of Return" for your formulas you want and place in the blank space. Use the "Discounted Cash Flow Technique" to build your spreadsheet formulas as described on page 27 of the textbook.
Next going down in Column 1, place "PV of All Benefits."
Finally, going down in Column 1, place "Yearly NPV of All Benefits."