Calculate the net present value (NPV), the return on investment (ROI) and the payback period using a discount rate of 8 percent for the following systems development project. Anticipated Year Annual Benefits Expected Annual Operating Costs Discount Factors at 8 Percent $55,000 $5,000 9259 2 $60,000 $5,000 .8573 $70,000 $5,500 7938 4 $75,000 $5,500 7349 $80,000 $7,000 .6805 6. $80,000 $7,000 .6301 $80,000 $7,000 .5833 $80,000 $8,000 5401 The initial development costs for the system were $225,000.

Calculate the net present value (NPV), the return on investment (ROI) and the payback period using a discount rate of 8 percent for the following systems development project. Anticipated Year Annual Benefits Expected Annual Operating Costs Discount Factors at 8 Percent $55,000 $5,000 9259 2 $60,000 $5,000 .8573 $70,000 $5,500 7938 4 $75,000 $5,500 7349 $80,000 $7,000 .6805 6. $80,000 $7,000 .6301 $80,000 $7,000 .5833 $80,000 $8,000 5401 The initial development costs for the system were $225,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Calculate the net present value (NPV), the return on investment (ROI) and the payback period using a discount rate of 8 percent for the following systems development project. Anticipated Annual Benefits Expected Annual Operating Costs Discount Factors at 8 Percent Year 1 $55,000 $5,000 .9259 $60,000 $5,000 8573 3 $70,000 $5,500 .7938 $75,000 $5,500 7349 $80,000 $7,000 .6805 $80,000 $7,000 .6301 7 $80,000 $7,000 .5833 8 $80,000 $8,000 .5401 The initial development costs for the system were $225,000.
Consider the following information about a project: PROJECT YEAR O YEAR 1 YEAR 2 YEAR 3 YEAR 4 COSTS $160,000 $43,000 $50,000 $50,000 $64,000 BENEFITS $0 $400,000 $400, 000 $500,000 $500,000 a) Calculate the NPV assuming 10% discount rate b) Determine in which year will be the payback c) Calculate (ROI)? Provide the detail answer for your calculation.
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