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MIS13 Chapter 14 Question File
The following Tables 1 and 2 show each cost component for the new CAD system as
well as annual maintenance costs over a five-year period.
Table 1 – CAD System Components Year 0 Costs
Item
Quantity
Cost/each
Hardware
PCs
50
$1,700
Network Cards
50
$50
Telecommunications
Backup Unit
1
$1,200
Software
CAD Software
50 licenses
$3,500/license
Database
50l licenses
$80
Table 2 – Estimated Annual Maintenance Costs
2013
2014
2015
2016
2017
PCs
$5,000
$5,000
$5,000
$5,000
$5,000
Plotters
$500
$500
$500
$500
$500
Tape Backup
$500
$500
$500
$500
$500
Cabling w/plugs (in feet)
$100
$100
$100
$100
$100
The system is expected to be completed at the end of year 0 (2008). From 2009 to 2013,
the new system is expected to reduce labor costs by $250,000 per year and to increase
gross revenue $150,000 per year.
Use another worksheet to calculate the following, using the capital budgeting models
described in this chapter:
