Question

1. Why is it difficult to assign a dollar figure to an intangible cost? Can it...

1. Why is it difficult to assign a dollar figure to an intangible cost? Can it ever be done? Explain your answer and provide an example.

For the #2 and #3, show your analysis using Microsoft Excel or other electronic spreadsheet application to complete the assignment.

2. Determine the NPV for the following: An information system will cost $110,000 to implement over a one-year period and will produce no savings during that year. When the system goes online, the company will save $45,000 during the first year of operation. For the next four years, the savings will be $30,000 per year. Assuming a 12 percent discount rate, what is the NPV of the system?

3. Assume the following facts: • A project will cost $45,000 to develop. • When the system becomes operational after a one-year development period, operational costs will be $9,000 during each year of the system’s five-year useful life. • The system will produce benefits of $30,000 in the first year of operation, and this figure will increase by a compound 10% each year. What is the payback period for this project? What is the ROI?

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Answer #1

Sum based on capital budgeting. Can not attach excel file. If any further understanding is need, feel free to provide feedback and ask

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