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Assume a Proposed System Has a Useful Life of 5

question 63

Essay

Assume a proposed system has a useful life of 5 years,one-time costs of $1,000,000,recurring costs of $250,000 per year,and tangible benefits of $750,000 per year.If the cost of capital is 10%,what is the overall NPV? Overall ROI? Break-even point?


Definitions:

Total Surplus

The total benefits society gains, encompassed by the addition of consumer surplus and producer surplus within a market.

Consumer Surplus

The variation between the sum consumers are willing to allocate for a good or service and the sum they actually allocate.

Surplus II

An additional amount of a resource, product, or service that exceeds the amount demanded or utilized.

Consumer Surplus

The discrepancy between what consumers are willing to spend on a good or service and their actual expenditures.

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