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(a) Bumble Bank set up its new banking
software costing $2.5 million dollars it
also revamped all its computer hardware and upgraded its network to
commission the new system. The additional hardware cost a further
$500,000.
All file conversion from the existing system was done by SWIFT Corporation
costing another $200,000. The bank also hired more IT staff for the
operation
of the system. The total IT staff payroll came up to $450,000 annually.
It is
assumed that the bank will use the software for another 10 years.
(i) What are the three main categories of cost for a system? [3]
(ii) Determine the various categories of cost for this system. [3]
(iii) Calculate the annual cost for this system. [3]
(b) Calculate the Payback period for the following project. Assume
the total
investment is $50,000
.Assume a corporate tax of 25%, and a total investment of $50,000.
[3]
(c) Analyze the following proposal and base on the calculation of
Marginal
Efficiency of Investment and give your conclusion if the investment
is feasible. [3]
Assume Fixed Investment of $27,000 and
a prime rate of 9%.
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