Essentials of Systems Analysis and Design (6th Edition)
6th Edition
ISBN: 9780133546231
Author: Joseph Valacich, Joey George
Publisher: PEARSON
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Chapter 4, Problem 5RQ
Explanation of Solution
Methods to perform economic cost-benefit analysis:
The three most commonly used methods to perform economic cost-benefit analysis are as follows:
- Net Present Value (NPV)
- NPV is used to determine and compare the profit in the investment.
- It helps to adjust the expenditures and returns, such that it can be evaluated equally over time.
- By using this NPV, the current value of the project can be calculated, which is established by the capital cost of the company.
- The current value of the project as well as the outlays can be determined by the discount rate.
- Return on Investment (ROI)
- Return on investment (ROI) is defined as the ratio of receipts of net cash of the project and the outlays cash of the project...
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Chapter 4 Solutions
Essentials of Systems Analysis and Design (6th Edition)
Ch. 4 - Prob. 1MCh. 4 - Prob. 2MCh. 4 - Prob. 3MCh. 4 - Prob. 4MCh. 4 - Prob. 5MCh. 4 - Prob. 6MCh. 4 - Prob. 7MCh. 4 - Prob. 8MCh. 4 - Prob. 9MCh. 4 - Prob. 10M
Ch. 4 - Prob. 11MCh. 4 - Prob. 12MCh. 4 - Prob. 13MCh. 4 - Prob. 14MCh. 4 - Prob. 15MCh. 4 - Prob. 16MCh. 4 - Prob. 17MCh. 4 - Prob. 18MCh. 4 - Prob. 19MCh. 4 - Prob. 20MCh. 4 - Prob. 21MCh. 4 - Prob. 22MCh. 4 - Prob. 1RQCh. 4 - Describe several project evaluation criteria.Ch. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - What are the potential consequences of not...Ch. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQCh. 4 - Prob. 11RQCh. 4 - Prob. 12PECh. 4 - Prob. 13PECh. 4 - Prob. 14PECh. 4 - Prob. 15PECh. 4 - Prob. 16PECh. 4 - Prob. 17PECh. 4 - Prob. 18PECh. 4 - Prob. 19PECh. 4 - Prob. 20PECh. 4 - Prob. 21PECh. 4 - Assume monetary benefits of an information system...Ch. 4 - Prob. 23PECh. 4 - Prob. 24PECh. 4 - Prob. 25PECh. 4 - Prob. 26PECh. 4 - Prob. 27PECh. 4 - Prob. 28PECh. 4 - Prob. 29DQCh. 4 - Prob. 30DQCh. 4 - Prob. 31DQCh. 4 - Prob. 32DQCh. 4 - Prob. 33CPCh. 4 - Prob. 34CPCh. 4 - Prob. 35CPCh. 4 - Prob. 36CQCh. 4 - Prob. 37CQCh. 4 - Identify a preliminary set of tangible and...Ch. 4 - Prob. 39CQCh. 4 - If you were assigned to help Jim with this...Ch. 4 - Prob. 41CQCh. 4 - Prob. 42CQCh. 4 - In Question 4, you analyzed the risks associated...
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- Explain the challenges and limitations associated with the use of cost estimation tools.arrow_forwardWhat is an algorithmic cost model, and how does it work? What disadvantages does it have in comparison to other cost estimation methods?arrow_forwardDescribe the significance of "cost drivers" when using parametric models for cost estimation.arrow_forward
- The board of directors of a company determines that senior management should be rewarded in order to achieve the company's objectives. The board of directors determines whether to award bonuses based on growth in share value at the conclusion of each fiscal year. Bonuses will be given in stock, which the managers may keep or sell on the open market. What are the ramifications of instituting a rewards scheme like this?arrow_forwardDistinguish between one-time and recurring costs, as well as between tangible and intangible advantages and expenditures.arrow_forwardDescribe the differences between tangible andintangible benefits and costs, and the differencesbetween one-time and recurring costsarrow_forward
- The board of directors of a firm believes that top management should be rewarded for their efforts in furthering the company's goals. At the conclusion of each year, the board of directors determines whether or not to award bonuses based on share price increases. Bonuses will be paid out in the form of stock, which managers will be able to keep or sell. What are the repercussions of implementing such a bonus program?arrow_forwardThe board of directors of a company decides that senior management has to be rewarded in order to achieve the company's objectives. The board of directors selects whether or not to award bonuses based on growth in share value at the end of each fiscal year. Bonuses will be given in shares, which the managers can keep or sell on the open market. What are the ramifications of implementing a bonus system like this?arrow_forwardWhat is algorithmic cost modeling, and how does it work? What distinguishes this methodology from other cost estimation methods?arrow_forward
- The board of directors of a corporation feels that senior management deserves compensation for their contributions to achieving the company's objectives. The board of directors decides whether or not to provide bonuses based on share price rises at the end of each year. Managers will get bonuses in the form of shares, which they may either retain or sell. What effects would putting in place such a bonus scheme have?arrow_forwardThe board of directors of an organization determines that it is necessary to create incentives for senior management to advance the organization's aims. The board of directors determines whether to award bonuses based on growth in share value at the conclusion of each fiscal year. Bonuses are to be given in shares that managers may hold or sell on the open market. What are the consequences of implementing such a bonus system?arrow_forwardWhat is algorithmic cost modeling? What problems does it suffer from when compared with other approaches to cost estimation?arrow_forward
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