[Solved]-Software Project Decision Point Need Determine Interest Rate Use Select Interest Rate Expl Q37165794
Software project decision point.
- You need to determine an interest rate to use—select aninterest rate and explain why you think this number should be used.Use it in your calculations in item 1.2.
- Given the information below on options 1 and 2, carry out threeforms of analysis: breakeven, ROI, and NPV.
- Make a recommendation on which way to proceed, based on the TCOfor each option.
- Option 1: Purchase the FunSoft package: Cost $200,000 forsoftware and $85,000 for hardware in year one; with $50,000 tocustomize it and a $40,000 annual licensing fee for the life of thecontract. There will be an annual saving of $61,000 due to thelayoff of a clerk.
- Option 2: Purchase the SoftComm package, which will operate onthe vendor’s hardware: Cost $250,000 for a five-year license,payable half up front and half during the first year ofimplementation. The maintenance contract, at $75,000 a year,includes all currently identified modifications to the software forthe first three years. The clerk’s hours will be cut by half, for asaving of $25,000 a year.
In both cases, sales are expected to increase from the current$1 million a year, by 10% per year each year (over each year’sprevious year’s sales) after full implementation.
Assume a five-year life for the software.
- Submit your response below in a one to two page summaryanalysis in APA format. Remember to cite your sources.
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