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    Cost Benefits Sample

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    Peng Guin
    Project A estimates the costs and benefits of developing an in-house system over 5 years. The total development costs are estimated to be PHP 187,752.45. Annual operating costs are projected to be PHP 27,360 initially and increase 10% each subsequent year. Projected annual tangible benefits include reduced overtime fees, increased profits from reduced late payments, and reduced penalty payments totaling PHP 99,960 initially and increasing 5% annually. A present value analysis estimates the cumulative lifetime time-adjusted costs to be PHP 124,688.81, indicating overall benefits of developing the system in-house over the 5 year period.

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    Cost Benefits Sample

    Uploaded by

    Peng Guin
    40 views4 pages
    Project A estimates the costs and benefits of developing an in-house system over 5 years. The total development costs are estimated to be PHP 187,752.45. Annual operating costs are projected to be PHP 27,360 initially and increase 10% each subsequent year. Projected annual tangible benefits include reduced overtime fees, increased profits from reduced late payments, and reduced penalty payments totaling PHP 99,960 initially and increasing 5% annually. A present value analysis estimates the cumulative lifetime time-adjusted costs to be PHP 124,688.81, indicating overall benefits of developing the system in-house over the 5 year period.

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    Project A estimates the costs and benefits of developing an in-house system over 5 years. The total development costs are estimated to be PHP 187,752.45. Annual operating costs are projected to be PHP 27,360 initially and increase 10% each subsequent year. Projected annual tangible benefits include reduced overtime fees, increased profits from reduced late payments, and reduced penalty payments totaling PHP 99,960 initially and increasing 5% annually. A present value analysis estimates the cumulative lifetime time-adjusted costs to be PHP 124,688.81, indicating overall benefits of developing the system in-house over the 5 year period.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as doc, pdf, or txt
    40 views4 pages

    Cost Benefits Sample

    Uploaded by

    Peng Guin
    Project A estimates the costs and benefits of developing an in-house system over 5 years. The total development costs are estimated to be PHP 187,752.45. Annual operating costs are projected to be PHP 27,360 initially and increase 10% each subsequent year. Projected annual tangible benefits include reduced overtime fees, increased profits from reduced late payments, and reduced penalty payments totaling PHP 99,960 initially and increasing 5% annually. A present value analysis estimates the cumulative lifetime time-adjusted costs to be PHP 124,688.81, indicating overall benefits of developing the system in-house over the 5 year period.

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    of 4

    Project A: Estimated Costs/Benefits to In-House Development

    DEVELOPMENT COSTS:

    Personnel
    3 Programmer/Analyst (40 hours, Php 200/hour) Php 24,000.00
    3 Trainer (20 hours, Php 300/hour) Php 18,000.00

    New Hardware & Software


    1 20.0 GB Hard Disk Drive (Php 3,088.00 each) Php 3,088.00
    1 Epson LX-300+ Dot Matrix Printer (Php 6,595.00 each) Php 6,595.00
    1 MS Visual Studio.NET 2003 (Php 59,345.00 each) Php 59,345.00
    1 MS SQL Server 2000 Standard Edition (Php 76,724.45 each) Php 76,724.45

    Total Development Costs Php 187,752.45

    PROJECTED ANNUAL OPERATING COSTS:

    Personnel
    3 Programmer/Analyst (40 hours, Php 200/hour) Php 24,000.00

    Expenses
    3 Epson 8750 Ribbon Cartridge (Php 120.00 each) Php 360.00
    5 Box Continuous Paper (Php 600.00 each) Php 3,000.00

    Total Projected Annual Cost Php 27,360.00

    PROJECTED ANNUAL TANGIBLE BENEFITS:

    Reduce Employee Overtime Fee (Billing System)


    (60/hr * 6 hrs * 12 months) Php 4,320.00
    Reduce Employee Overtime Fee (Payroll System)
    (60/hr * 6 hrs * 24 bi-months) Php 8,640.00
    Increased Profit due to Reduced late payments (Billing, AR, Payment
    Subsystem)
    (Estimated loss due to delinquent clients per month)
    ( 1% * 700,000 per month * 12 months) Php 84,000.00
    (Payroll System)
    Reduced Penalty Payments (Tax, GSIS, SSS, Loan Premiums)
    @ 250 * 12 months Php 3,000.00

    99,960.00
    Total Projected Annual Cost Php 8,330
    PRESENT VALUE ANALYSIS TO IN-HOUSE DEVELOPMENT

    Cash Flow Description Year 0 Year 1 Year 2 Year 3 Year 4 Year 5


    Development Cost -187,752.45
    Operation and Maintenance
    -27,360.00 -28,728.00 -30,164.40 -31,672.62 -33,256.25
    Cost (increased 10% per yr)
    Discount Factors for 10% 1.000 0.909 0.826 0.751 0.683 0.621
    Time-adjusted Costs (Adjusted
    -187,752.45 -24,870.24 -23,729.33 -22,653.46 -21,632.40 -20,652.13
    to Present)
    Cumulative Time-adjusted
    -187,752.45 -212,622.69 -236,352.02 -259,005.48 -280,637.88 -301,290.01
    Costs
     
    Benefits Derived from
    Operation of New System
    (70% on the 1st yr and 5% on
    the succeeding year) 52,500.00 90,000.00 94,500.00 99,225.00 104,186.25 109,395.56
    Discount Factors for 10% 1.000 0.909 0.826 0.751 0.683 0.621
    Time-adjusted Benefits
    (Adjusted to Present) 52,500.00 81,810.00 78,057.00 74,517.98 71,159.21 67,934.64
    Cumulative Time-adjusted
    Benefits 52,500.00 134,310.00 212,367.00 286,884.98 358,044.18 425,978.83
     
    Cumulative Lifetime Time-
    adjusted Costs -135,252.45 -78,312.69 -23,985.02 27,879.49 77,406.30 124,688.81

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