1. Direct cost is:
= $97,475
Training cost is:
= $18,150
Total cost of Management Information System is:
= $115,625
2. The number of years that the break-even of this project cost will be achieved is:
= 5 years.
Data and Calculations:
Cost of the MIS:
150 computers at $500 each, = $75,000 (150 x $500)
5 Printers at $400 each = 2,000 (5 x $400)
5 network connections at $900 each = 4,500 (5 x $900)
20 boxes of Papers and stationery at $50 each 1,000 (20 x $50)
5 Scanners at $2,995 each 14,975 (5 * $2,995)
Total direct costs of the new MIS = $97,475
The training costs:
Fringe benefits $50 each to 150 participants = $7,500 ($50 x 150)
15 trainers at $ 500 each. 7,500 ($500 x 15)
Training room cost $750 per session 2,250 ($750 x 3)
Administrative cost is $300 per session 900 ($300 x 3)
Total cost of training $18,150
Total cost of the Management Information System = $115,625 ($97,475 + $18,150)
Annual benefits = $25,000
Break-even project cost (payback period) will be achieved in 4.625 years ($115,625/$25,000)
= 5 years approximately
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