Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Information Technology
Cost Benefit Analyses of a Computer Purchase
In today's commercial environment, it is necessary that small as well as large businesses are able to remain competitive. For every investment there will be an opportunity cost, so it is essential that potential investment are assessed to help with the maximization of value creation. One approach that is frequently used is the cost benefit approach. The cost benefit model measures the costs and the benefits, with the underlying principle that an investment or project should only proceed if the benefits are greater than the costs which will be incurred. If a small business is considering investing in a computer, a cost benefit analysis may help with the assessment to determine if the investment is likely to be beneficial. This will start with the assessment of the costs that will be incurred, and the potential benefits. In this case it is assumed that a business, such as an independent shop, is considering purchasing a computer in order to increase efficiency for counting and record-keeping, as well as facilitate an expansion strategy into e-commerce, allowing the business to sell online.
Costs
The computer selected as satiable for the small business is a Dell OptiPlex mini tower. It is essential that all requirements are considered and not just the cost of the core computer. Taking the figures from the Dell website to following items are assessed as required. The computer is a starting point, but it is also an essay to look at the additional hardware, software and support will be needed. For example, for a computer system it will also be necessary for the business to have a monitor, a speaker to go the monitor, and a printer. As the business will rely on a computer, it is also advisable to ensure there is sufficient...
The costs include an extended warranty for both the computer and printer, and accident insurance so that next a replacement can be made. The software included is Microsoft Office, as well as a three-year Dell data protection and encryption license.
Table 1; Initial Costs
OptiPlex 3020 Tower
$529.00
20-inch monitor
$119.99
Speaker
$20.30
3-year technical support/warranty $91.30
Accident insurance
$34.30
Printer with 3-year warranty
$319.99
Microsoft Office
$195.30
Dell data protection and encryption (3-year license)
$72.80
Installation
$69.30
Total
$1,452.28
Benefits
The next stage is to consider the benefits that will emerge as a result of the investment. The benefits will not be immediate, puts out over a period of time. In this assessment it is assumed that the computer will have a life of three years, after which it will need to be replaced. Therefore, the cost benefit analysis will be based on a three-year period. As the benefits are accumulated over three years, the initial assessment will be based on the annual benefits that will be felt.
There are several potential sources benefit; the first the ability of the firm to undertake an e-commerce strategy. This will increase sales. The development of forecasts will take into account the way in which the sales will be low in the first year and grow, The benefit from the online sales is the net benefit to the firm, measured as the increase in net profit (sales less costs) that is expected to occur as a result of the new strategy…
This shows that there is still a positive outcome; the benefits are greater than the costs. However, the benefits are not as great as the first calculation due to the time cost of money. It is also important to remember that this net present value is speculative as it is making the assumption of a 5% inflation rate or cost of capital. This can change, and as such there is also the ability to apply a higher level to ensure that there would remain a positive value.
Overall, it would appear that, as long as the increased profit projections are correct, that this would be a wise investment and produce benefits that are far greater than the costs.
The type of business may be changed to suit the students needs www.dell.com, correct on the 12th Jan 2015
Investment and Portfolio Analysis With the increasing economic downturn in the economy, the need of investment has increased considerable. The potential investors generally foregoes their current leisure and earnings and investment their earnings and expect to earn benefits in future for the same. For analyzing the investment, we have taken into consideration a hypothetical investor who has $50,000 which needs to be invested in different, in different assets. Investment is one of the
A common thread through these fifteen stocks is that they not only represent diversification as a group, but most of the companies chosen also have a range diversification within the company's operations. The companies are spread around the world, and include a number of sectors. For example, within technology the portfolio has access to the health care sector through Cerner; within ADRs there is exposure to the Internet, chemicals and
However, it will depend upon the impact that rising prices will have on consumer spending and corporate balance sheets. Geopolitical tensions could have an impact upon the price of commodities most notably: oil and gold. As various uncertainties around the globe, could have an impact upon the availability of oil supplies, which will cause prices to increase. A good example of this can be seen with the different protests that
The instructor does sit with the student when he or she is training with the devices the FAA approves for the educational computer training. Sometimes a separate computer is used during this process, but the teacher is able to monitor and control the student's flight as well as plan out every detail for him or her at that particular time (United States Gernal Accounting Office, 1999). For those that are
New King Fahad National Library in Riyadh The rise of the electronic medium of media amongst the masses has become the main motive of decrease in the progress of printed tools and materials along with the decrease in using the academic materials. Each one of these new developments combined with the data of students visiting the library has laid down numerous claims on the entire abolishment of the standard structure of
CBVH then continues to work with VESID to assess performance on an ongoing basis, participate in on-site reviews, and provide technical assistance or recommend adjustments to contracts as needed. In the near century that these agencies have been in place, they have worked together in their efforts to assist those with disabilities to find employment. The current supported employment delivery system has allowed all eligible individuals with the most significant