Assume monetary benefits of an informataion system of $70,000 the first year and increasing
benefits of $10,000 a year for the next four years, one-time development costs of $90,000 and
recurring costs of $40,000 per year over the duration of the system’s life. The discount rate for
the company was 1! percent. Using a five-year time horizon, calculate the net present value of
these costs and benefits. Also calculate the overall return on investment and then present a breakeven analysis. At what point does breakeven occur?

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