Chapter 7 Capstone Case New Century Wellness Group

Tasks
1. Provide an overview of the proposed system, including costs and benefits, with an explanation
of the various cost-benefit types and categories.
Costs of the current system

Overtime ever day=6 hour

Total cost of Over time every day= 6*15$ per hour
Daily errors of employees=3
Correction of error= 20 minutes to correct one error.
So the total cost for error correction is= $90 every day
It means, after size months we need to pay additional one salary.
The total cost after five years is= $113400

Solution 1:

We can use the option of in-house system development

This will take twelve weeks, including the cost of the software and the cost of the analysis. When the
employees will get enough training, then they need to $16800 salary and the cost of the software is
$2500.
Thats why for this option after 5 years we need to pay total $19300

Solution 2:

Purchase the software

Cost of the software is= $12000

Maintenance services, configuration, annual service cost = $600
Salary of the system analyst for first year only=$5000
Total first year cost=$9600
Total cost after five years= $20000

So the current system cost=$113400

Cost of solution 1=$19300
Cost of solution 2=$20000
2. Develop an economic feasibility analysis, using payback analysis, ROI, and present
value (assume a discount rate of 10%).
Benefit analysis

Year 1

Year 2

Year 3

Benefits value

$405000

$534000

$678670

10% Discount

0.6892

0.5342

0.312

Present benefits

$279126

$285263

$292643

Cost of
Development

Year 0

$1121365

Ongoing cost
10% discount

Cost of Present
value

$857032
$1121365

$241000

$241000

$241000

0.6892

0.5324

0.4312

$166097

$128742

$103919

Present value of
net benefits and
cost

$1121365

$113029

$156521

$188724

Cumulative net
present value

$1121365

$1008336

$851851

$663091

Two years and six months

Payback Period

Total

$398758