The Studebaker Company Is Evaluating Two Proposals for a Commercial

question 76

Essay

The Studebaker Company is evaluating two proposals for a commercial software package.Three relevant factors were identified and weighted.Then the evaluation team assigned raw scores from 1 to 5 to each factor for each vendor.Proposal One will cost $70,000 and Proposal Two will cost $65,000.
$\begin{array}{lccc}&& \text { Proposal } & \text { Proposa } \\&\text { Weight } & \text { One } & \text { Two }\\\text { Vendor support } & 30 & 4 & 5 \\\text { Ease of use } & 30 & 5 & 4 \\\text { Range of capabilities } & 40 & 5 & 3\end{array}$ Determine a composite score and a performance/cost index for both proposals.Which proposal is the more economically feasible choice?

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Definitions:

Capital Investment

Funds invested in a business with the expectation of future returns, often in the form of physical assets or capital expenditures.

Recovery

The process of regaining possession or control of something stolen or lost, or the process of returning to a normal state of health, mind, or strength.

Average Rate

A value derived by dividing the sum of several rates by the number of rates, often used in financial calculations.

Capital Budgeting

The process of making investment decisions in long-term assets and projects.