Question

If the following table were presented comparing the costs and tangible benefits of two accounting information systems:

Costs and Tangible Benefits	System 1	System 2
Project completion time	1 year	1 year
Expected life of the system	5 years	5 years
One-time costs	$300,000	$140,000
Recurring costs incurred at beginning of years 1–5	$45,000	$55,000
Annual tangible benefits incurred at end of years 1–5	$170,000	$135,000

Does this table provide enough information to make an informed decision? Discuss in 100–120 words.

Answer 1

Answer :-

Explanation :-

● The results of the analysis are expressed as payback period which is the duration needed for the benefitsto repay the costs.

● CBA is an important tool in project management and it is applicable in situations likeevaluating a new project, assessment of any change initiative and determining the feasibility of differentpurchases.

● The cost-benefit-analysis is an important tool in making simple and quick financial decisions in different project management activities. ●However, this particular tool is no longer effective if used to create high-cost decisions.