fesability analyis solution
qwerty564
feasibility_analysis_question1_1.ppt*
What is Feasibility Analysis?
- Feasibility
- A measure of how beneficial or practical the development of an information systems will be to an organization.
- Feasibility Analysis
- The process by which feasibility is measured.
- The goal of feasibility analysis:
- To enable the organization to determine whether or no to proceed with a project
- To identify any important risks associated with the project
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Economic Feasibility
- An economic feasibility analysis (or cost-benefit analysis) should be performed to identify the financial risk associated with the project
- Estimate project development costs
- Estimate operational costs after project
- Estimate financial benefits based on annual savings and increased revenues
- Calculate using table of costs and benefits
- Uses net present value (NPV) techniques
Question
- A company is trying to project if it needs to undertake a new project for replacement of a CRM system. The current operating cost to maintain the old CRM system is 850K growing at a rate of 10% year over year for the next 5 years.
- If a new System is built, the current Salaries and Wages associated with NEW development is.
- The operating cost to maintain the new system is 250K year over year for the next 5 years.
So if we consider a discount rate of 12%, financially, considering a NPV analysis, should the company engage in NEW CRM product developmet.
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