Valuing an IT Investment Is Difficult Because of Many Reasons

question 70

Multiple Choice

Valuing an IT investment is difficult because of many reasons. One of the reasons is:

• A) Many IT investments are necessities and payback is hard to calculate.
• B) Increased customer satisfaction is not valued enough to justify costs.
• C) IT investments often add no real business value.
• D) IT managers do not see the need to value an investment whose payback period is relatively short.
• E) IT is seen as "a necessary evil".

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Definitions:

Interest Rates

The cost of borrowing money or the return on invested savings, typically expressed as a percentage of the principal amount per year.

Deposit Expansion Multiplier

The ratio of the amount by which deposits can increase to the original amount of new reserves; it shows how money multiplies in the banking system.

Reserve Ratio

This is the fraction of depositors' balances banks must have on hand as cash.

Discount Rate

The rate of interest applied to loans obtained by commercial banks and other saving organizations from the lending facility of their regional Federal Reserve Bank.