# Assume monetary benefits of an information system of \$40,000 the

Assume monetary benefits of an information system of \$40,000 the first year and increasing benefits of \$10,000 a year for the next five years (year 1 = \$50,000, year 2 = \$60,000, year 3 = \$70,000, year 4 = \$80,000, year 5 = \$90,000). One-time development costs were \$80,000 and recurring costs were \$45,000 over the duration of the system’s life. The discount rate for the company was 11 percent. Using a six-year time horizon, calculate the net present value of these costs and benefits. Also, calculate the overall return on investment and then present a break-even analysis. At what point does break-even occur?

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