Project Initiation & Planning Reading Chapter 2, and Toolkit Part C (Analyzing the Business Case) - Systems Analysis and Design Homework Case Study Company XYZ has decided to build an

accounts receivable application. The project is estimated to take 2 years to complete. It is estimated that the project will have a one-time implementation cost of $2M over the 2 year development phase. Beginning in the 3rd year, the project will have a recurring expense of $25,000 per year for additional Oracle licenses. Upon rollout of the application in year 3, Company XYZ will no longer need its mainframe computer at a saving of $325,000 per year. Assume a maximum life for the application to be 10 years from date of deployment. (12 years from now) Assume that for all benefits and costs calculations, the benefit and cost are received/expensed at the end of each year Assume that for the one-time implementation cost $1M is expensed at the end of year 1, and $1M at the end of year 2 Assume an interest rate of 6% Making a discount factor of: Year (1) .9434 (2) .8900 (3) .8396 (4) 0.7921 (5) .7473 (6) .7050 (7) .6651 (8) .6274 (9) .5919 (10) .5584 (11) .5268 (12) ???? 1. Compute the discount rate for year 12 2. What is the total Net Present Value derived by implementing this system? 3. What is the Return on Investment for this system? 4. When is the Break-Even point for this system? Determine the year, and compute exact partial year. 5. When is the Break-Even point for this system (with partial year calculation), if the interest rate is 4%? (It is best if you make the interest rate a cell value in your Excel and base your calculation on that) NOTE: Submit an Excel spreadsheet that shows your calculations. Do not use Excel financial formulas such as NPV or others.