As a project manager, you have been asked to evaluate the feasibility of the fol
ID: 2656590 • Letter: A
Question
As a project manager, you have been asked to evaluate the feasibility of the following proposed acquisition:
Your organization is considering the purchase of an automated OB/GYN documentation system.Proposed costs are as follows:
Hardware
$ 250,000
Software
$ 400,000
Software maintenance
$ 65,000
Training
$ 35,000
Implementation
$ 75,000
Software maintenance will start after one year and will be incurred annually.All other costs are incurred in the first year.
Your analysis projects the following benefits to be expected annually:
Labor savings
$ 220,000
Equipment savings
$ 55,000
Reduced malpractice premiums
$ 20,000
Increase in OB business
$ 50,000
Construct a table showing the investment, and showing annual benefits for five years.
Use a discount rate of 5%.
Use an assumed inflation rate of 4%.
Show the Net Present Value and the Internal Rate of Return of the proposed investment every year for five years.
Are any of the benefits operational, or should some benefits be considered tactical or strategic benefits?
Hardware
$ 250,000
Software
$ 400,000
Software maintenance
$ 65,000
Training
$ 35,000
Implementation
$ 75,000
Explanation / Answer
34.46%
No there are also operational benfits from it also
Annual Initial Cost Annual Savings 250000 220000 400000 55000 65000 20000 35000 50000 75000 Total 825000 345000 Inflation per year 4% Therefore Saving in Year 1 345000 Year 2 358800 Year 3 373152 Year 4 388078.1 Year 5 403601.2Related Questions
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