Answered: Make a distinction between one-time…

Make a distinction between one-time charges and ongoing expenditures, as well as between the benefits and costs associated with physical and intangible assets

MIS

9th Edition

ISBN:9781337681919

Author:BIDGOLI

Publisher:BIDGOLI

Chapter1: Information Systems: An Overview

Section: Chapter Questions

Problem 5AYRM

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Concept explainers

Requirement Analysis

A process that determines the user expectations for a software product is called requirement analysis. In software engineering, requirement analysis is known as requirement engineering. It involves communication with end-users and stakeholders to determine whether the system or software requirements are validated, conflicts are solved, and key requirements are documented. The first activity of the Software Development Life Cycle (SDLC) is requirement analysis.

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Create a spreadsheet for the following: Assuming monetary benefits of an information system at $85,000 per year, one-time costs of $75,000, recurring costs of $35,000 per year, a discount rate of 12 percent, and a five-year time horizon, calculate the net present value of these costs and benefits of an information system. Also calculate the overall return on investment of the project and then present a break-even analysis. At what point does break-even occur?