Modern Systems Analysis And Design 6th Edition By Jeffry E.Hoofer -Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below Modern Systems Analysis and Design, 6e (Hoffer, et al.) Chapter 5 Initiating and Planning Systems Development Projects 1) Proper and insightful project planning, including determining …
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Modern Systems Analysis And Design 6th Edition By Jeffry E.Hoofer -Test Bank
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Sample Questions Are Posted Below
Modern Systems Analysis and Design, 6e (Hoffer, et al.)
Chapter 5 Initiating and Planning Systems Development Projects
1) Proper and insightful project planning, including determining project scope as well as identifying project activities, can easily reduce time in later project phases.
Answer: TRUE
Diff: 2 Page Ref: 124
2) The objective of project initiation and planning is to transform a vague system request document into a tangible project description.
Answer: TRUE
Diff: 3 Page Ref: 124
3) Project initiation focuses on activities that will help organize a team to conduct project planning.
Answer: TRUE
Diff: 2 Page Ref: 125
4) Project planning focuses on defining clear, discrete activities and the work needed to complete each task.
Answer: TRUE
Diff: 2 Page Ref: 125
5) The objective of the project planning process is the development of a Baseline Project Plan and a Statement of Work.
Answer: FALSE
Diff: 2 Page Ref: 125
6) The Project Scope Statement clearly outlines the objectives and constraints of the project for the development group.
Answer: FALSE
Diff: 2 Page Ref: 126
7) The major outcomes and deliverables from project initiation and planning are the Baseline Project Plan and the Project Scope Statement.
Answer: TRUE
Diff: 2 Page Ref: 126
8) The Systems Service Request reflects the best estimate of the project’s scope, benefits, costs, risks, and resource requirements, given the current understanding of the project.
Answer: FALSE
Diff: 2 Page Ref: 126
9) The Explanation of Services is a short document prepared for the customer that describes what the project will deliver and outlines all work required to complete the project.
Answer: FALSE
Diff: 2 Page Ref: 126
10) The Statement of Work is a document prepared for the customer during project initiation and planning that describes what the project will deliver and outlines generally at a high level all work required to complete the project.
Answer: FALSE
Diff: 2 Page Ref: 126
11) The Project Scope Statement can be used as the basis of a formal contractual agreement outlining firm deadlines, costs, and specifications.
Answer: TRUE
Diff: 1 Page Ref: 126
12) Assessing project feasibility is a required activity for all information systems projects.
Answer: TRUE
Diff: 1 Page Ref: 127
13) The culmination of the feasibility analyses form the business case that justifies the expenditure of resources on the project.
Answer: TRUE
Diff: 2 Page Ref: 127
14) Economic feasibility is the process of identifying the financial benefits and costs associated with a development project.
Answer: TRUE
Diff: 1 Page Ref: 127
15) During project initiation and planning, you should precisely define all benefits and costs related to a particular project.
Answer: FALSE
Diff: 2 Page Ref: 127
16) Opening new markets and increasing sales opportunities is a tangible benefit.
Answer: TRUE
Diff: 2 Page Ref: 129
17) Increased flexibility is an intangible benefit.
Answer: FALSE
Diff: 2 Page Ref: 130
18) Improvement of management planning and control is a tangible benefit.
Answer: TRUE
Diff: 2 Page Ref: 129
19) Competitive necessity, more timely information, and improved organizational planning are intangible benefits.
Answer: TRUE
Diff: 2 Page Ref: 130
20) Site preparation is an example of a one-time cost.
Answer: TRUE
Diff: 1 Page Ref: 130
21) During project initiation and planning, potential tangible benefits may have to be considered intangible.
Answer: TRUE
Diff: 2 Page Ref: 130
22) Disruption to the rest of the organization is an example of a procurement cost.
Answer: FALSE
Diff: 3 Page Ref: 131
23) Management, operation, and planning personnel are examples of start-up costs.
Answer: FALSE
Diff: 3 Page Ref: 131
24) Intangible benefits are benefits associated with project start-up, development, or system start-up.
Answer: FALSE
Diff: 2 Page Ref: 130
25) Variable costs are costs resulting from the ongoing evolution and use of a system.
Answer: FALSE
Diff: 2 Page Ref: 131
26) Fixed costs are costs that are billed or incurred at a regular interval and usually at a fixed rate.
Answer: TRUE
Diff: 1 Page Ref: 131
27) The time value of money compares present cash outlays to future expected returns.
Answer: TRUE
Diff: 2 Page Ref: 132
28) Because many projects may be competing for the same investment dollars and may have different useful life expectancies, all costs and benefits must be viewed in relation to their present rather than future value when comparing investment options.
Answer: TRUE
Diff: 3 Page Ref: 132
29) Using a discount rate of 10%, the present value of a $2,500 benefit received 5 years from now is $1,552.30.
Answer: TRUE
Diff: 2 Page Ref: 133
30) Using a discount rate of 14%, the present value of a $10,000 benefit received 5 years from now is $5,500.49.
Answer: FALSE
Diff: 2 Page Ref: 133
31) Using a discount rate of 12%, the present value of a $50,500 benefit received 2 years from now is $39,859.69.
Answer: FALSE
Diff: 2 Page Ref: 133
32) The objective of ROI analysis is to discover at what point cumulative benefits equal costs.
Answer: FALSE
Diff: 2 Page Ref: 133
33) If the NPV of all costs is $100,000 and the NPV of all benefits is $170,000, then the ROI would be 35%.
Answer: FALSE
Diff: 2 Page Ref: 133
34) If the NPV of all benefits is $150,000 and the NPV of all costs is $125,000, then the ROI is 15%.
Answer: FALSE
Diff: 2 Page Ref: 133
35) If the NPV of all benefits is $2,500,000 and the NPV of all costs are $1,000,000 then the ROI is 10%.
Answer: FALSE
Diff: 2 Page Ref: 133
36) Most techniques for analyzing economic feasibility employ the time value of money concept.
Answer: TRUE
Diff: 2 Page Ref: 134
37) Fulfillment feasibility is the process of assessing the development organization’s ability to construct a proposed system.
Answer: FALSE
Diff: 2 Page Ref: 135
38) The purpose of operational feasibility is to understand the degree to which a proposed system will likely solve the business problems or take advantage of opportunities.
Answer: TRUE
Diff: 2 Page Ref: 138
39) Generally speaking, legal and contractual feasibility is a greater consideration if your organization has historically used an outside organization for specific systems or services that you now are considering handling yourself.
Answer: TRUE
Diff: 2 Page Ref: 139
40) The construction of an information system can have political ramifications.
Answer: TRUE
Diff: 1 Page Ref: 139
41) All information collected during project initiation and planning is collected and organized into a document called the Baseline Project Plan.
Answer: TRUE
Diff: 2 Page Ref: 140
42) Referencing the Management Issues section of the Baseline Project Plan, the communication plan provides a description of the team member roles and reporting relationships.
Answer: FALSE
Diff: 3 Page Ref: 141
43) A walkthrough is a peer group review of any product created during the systems development process.
Answer: TRUE
Diff: 2 Page Ref: 145
44) Referencing a walkthrough, the coordinator reviews the work product in terms of future maintenance activities.
Answer: FALSE
Diff: 2 Page Ref: 145
45) Referencing a walkthrough, the maintenance oracle ensures that the work product adheres to organizational technical standards.
Answer: FALSE
Diff: 3 Page Ref: 145
46) Referencing a walkthrough, the user makes sure that the work product meets the needs of the project’s customers.
Answer: TRUE
Diff: 1 Page Ref: 145
47) The project initiation and planning process for an Internet-based electronic commerce application is similar to the process followed for other applications.
Answer: TRUE
Diff: 2 Page Ref: 150
48) Walkthroughs are a common occurrence in most system development groups.
Answer: TRUE
Diff: 2 Page Ref: 146
49) The least amount of project planning effort is typically expended on the feasibility assessment activities.
Answer: FALSE
Diff: 2 Page Ref: 143
50) As a rule of thumb estimate, what percentage of the entire development effort should be devoted to the project initiation and planning process?
Answer: A
Diff: 2 Page Ref: 124
51) Activities designed to assist in organizing a team to conduct project planning is the focus of:
Answer: C
Diff: 2 Page Ref: 125
52) How is project planning distinct from general information systems planning?
Answer: A
Diff: 2 Page Ref: 125
53) Which of the following is not an element of project initiation?
Answer: B
Diff: 2 Page Ref: 126
54) The objective of the project planning process is:
Answer: A
Diff: 2 Page Ref: 126
55) Which of the following is an element of project planning?
Answer: B
Diff: 2 Page Ref: 126
56) The Baseline Project Plan:
Answer: D
Diff: 2 Page Ref: 126
57) A major outcome and deliverable from the project initiation and planning phase that contains the best estimate of a project’s scope, benefits, costs, risks, and resource requirements defines the:
Answer: A
Diff: 2 Page Ref: 126
58) The justification for an information system, presented in terms of the tangible and intangible economic benefits and costs and the technical and organizational feasibility of the proposed system best defines:
Answer: C
Diff: 2 Page Ref: 126
59) The Project Scope Statement:
Answer: D
Diff: 2 Page Ref: 126
60) A document prepared for the customer during project initiation and planning that describes what the project will deliver and outlines generally at a high level all work required to complete the project is the:
Answer: B
Diff: 2 Page Ref: 126
61) To identify the financial benefits and costs associated with the development project is the purpose of:
Answer: A
Diff: 2 Page Ref: 127
62) Cost reduction and avoidance, error reduction, and increased flexibility are examples of:
Answer: C
Diff: 2 Page Ref: 129
63) A savings of $3,000 resulting from a data entry error correction would most likely be classified as a(n):
Answer: C
Diff: 2 Page Ref: 129
64) A benefit derived from the creation of an information system that can be measured in dollars and with certainty is a(n):
Answer: C
Diff: 2 Page Ref: 129
65) Tangible benefits would include:
Answer: D
Diff: 2 Page Ref: 129
66) The reduction of waste creation is an example of a(n):
Answer: A
Diff: 2 Page Ref: 130
67) A cost associated with an information system that can be measured in dollars and with certainty is referred to as a(n):
Answer: B
Diff: 2 Page Ref: 129
68) Which of the following would be classified as a tangible cost?
Answer: B
Diff: 2 Page Ref: 129
69) Capital costs, management and staff time, and consulting costs are examples of:
Answer: D
Diff: 3 Page Ref: 131
70) Infrastructure replacement/improvements, system maintenance costs, and user training and support are examples of:
Answer: B
Diff: 3 Page Ref: 131
71) Which of the following would be classified as an intangible cost?
Answer: C
Diff: 2 Page Ref: 130
72) A cost associated with an information system that cannot be easily measured in terms of dollars or with certainty refers to:
Answer: C
Diff: 2 Page Ref: 130
73) A cost associated with project start-up and development or system start-up refers to a(n):
Answer: B
Diff: 2 Page Ref: 130
74) A cost resulting from the ongoing evolution and use of a system refers to a(n):
Answer: A
Diff: 2 Page Ref: 131
75) Application software maintenance, new software and hardware leases, and incremental communications are examples of:
Answer: A
Diff: 2 Page Ref: 131
76) The concept of comparing present cash outlays to future expected returns best defines:
Answer: C
Diff: 2 Page Ref: 132
77) The rate of return used to compute the present value of future cash flows refers to:
Answer: A
Diff: 2 Page Ref: 133
78) The current value of a future cash flow is referred to as its:
Answer: B
Diff: 2 Page Ref: 133
79) The analysis technique that uses a discount rate determined from the company’s cost of capital to establish the present value of a project is commonly called:
Answer: C
Diff: 2 Page Ref: 133
80) The ratio of the net cash receipts of the project divided by the cash outlays of the project, enabling tradeoff analysis to be made between competing projects is often referred to as:
Answer: A
Diff: 2 Page Ref: 135
81) The analysis technique that finds the amount of time required for the cumulative cash flow from a project to equal its initial and ongoing investment is referred to as:
Answer: B
Diff: 2 Page Ref: 133
82) To gain an understanding of the organization’s ability to construct the proposed system is the purpose of:
Answer: C
Diff: 2 Page Ref: 135
83) An assessment of the development group’s understanding of the possible target hardware, software, and operating environments, system size, complexity, and the group’s experience with similar systems should be included as part of:
Answer: A
Diff: 2 Page Ref: 135
84) When conducting a technical risk assessment, which of the following is true?
Answer: D
Diff: 2 Page Ref: 137-138
85) A new system or the renovation of existing systems, user perceptions, and management commitment to the system are examples of which of the following risk factors?
Answer: B
Diff: 3 Page Ref: 136
86) The number of members on the project team, project duration, and the number of organizational departments involved in the project are examples of which of the following risk factors?
Answer: C
Diff: 2 Page Ref: 136
87) To gain an understanding of the likelihood that all potential time frame and completion date schedules can be met and that meeting these dates will be sufficient for dealing with the needs of the organization is the purpose of:
Answer: A
Diff: 2 Page Ref: 138
88) The process of assessing the degree to which a proposed system solves business problems or takes advantage of business opportunities refers to:
Answer: B
Diff: 2 Page Ref: 138
89) The process of assessing potential legal and contractual ramifications due to the construction of a system refers to:
Answer: B
Diff: 2 Page Ref: 139
90) To gain an understanding of how key stakeholders within the organization view the proposed system is the purpose of:
Answer: C
Diff: 2 Page Ref: 139
91) The following are elements of project planning:
Answer: B
Diff: 2 Page Ref: 126
92) A peer group review of any product created during the system development process refers to:
Answer: A
Diff: 2 Page Ref: 145
93) At a walkthrough meeting, the person who plans the meetings and facilitates a smooth meeting process is referred to as the:
Answer: B
Diff: 2 Page Ref: 145
94) At a walkthrough meeting, the person (or group) who ensures that the work product meets the needs of the project’s customers is referred to as the:
Answer: B
Diff: 2 Page Ref: 145
95) At a walkthrough meeting, the person who ensures that the work product adheres to organizational technical standards is referred to as the:
Answer: D
Diff: 2 Page Ref: 145
96) At a walkthrough meeting, the person who reviews the work product in terms of future maintenance activities is referred to as the:
Answer: C
Diff: 2 Page Ref: 145
97) At walkthrough meetings, there is a need to have individuals play specific roles such as:
Answer: B
Diff: 3 Page Ref: 145
98) Which of the following is NOT a role at a walkthrough meeting?
Answer: D
Diff: 2 Page Ref: 145
99) Which of the following is NOT a major section of the Baseline Project Plan?
Answer: A
Diff: 3 Page Ref: 141
100) A __________ is the justification for an information system, presented in terms of the tangible and intangible economic benefits and costs and the technical and organizational feasibility of the proposed system.
Answer: business case
Diff: 2 Page Ref: 126
101) The __________ is the major outcome and deliverable from the project initiation and planning phase that contains the best estimate of the project’s scope, benefits, costs, risks, and resource requirements.
Answer: Baseline Project Plan
Diff: 2 Page Ref: 126
102) The __________ is a document prepared for the customer during project initiation and planning that describes what the project will deliver and outlines generally at a high level all work required to complete the project.
Answer: Project Scope Statement
Diff: 2 Page Ref: 126
103) __________ is the process of identifying the financial benefits and costs associated with a development project.
Answer: Economic feasibility
Diff: 1 Page Ref: 127
104) A __________ is a benefit derived from the creation of an information system that can be measured in dollars and with certainty.
Answer: tangible benefit
Diff: 1 Page Ref: 129
105) An __________ is a benefit derived from the creation of an information system that cannot be easily measured in dollars or with certainty.
Answer: intangible benefit
Diff: 1 Page Ref: 130
106) A __________ is a cost associated with an information system that can be easily measured in dollars and with certainty.
Answer: tangible cost
Diff: 1 Page Ref: 130
107) An __________ is a cost associated with an information system that cannot be easily measured in terms of dollars or with certainty.
Answer: intangible cost
Diff: 1 Page Ref: 130
108) __________ are costs associated with project start-up and development, or system start-up.
Answer: One-time costs
Diff: 2 Page Ref: 130
109) __________ are costs resulting from the ongoing evolution and use of a system.
Answer: Recurring costs
Diff: 2 Page Ref: 131
110) The __________ is the concept of comparing present cash outlays to future expected returns.
Answer: time value of money
Diff: 2 Page Ref: 132
111) The __________ is the rate of return used to compute the present value of future cash flows.
Answer: discount rate
Diff: 2 Page Ref: 133
112) __________ is the current value of a future cash flow.
Answer: Present value
Diff: 2 Page Ref: 133
113) __________ finds the amount of time required for the cumulative cash flow from a project to equal its initial and ongoing investment.
Answer: Break-even analysis
Diff: 2 Page Ref: 133
114) __________ is the ratio of the net cash receipts of the project divided by the cash outlays of the project.
Answer: Return on investment
Diff: 3 Page Ref: 133
115) __________ uses a discount rate determined from the company’s cost of capital to establish the present value of the project.
Answer: Net present value
Diff: 2 Page Ref: 133
116) __________ is the process of assessing the development organization’s ability to construct a proposed system.
Answer: Technical feasibility
Diff: 2 Page Ref: 135
117) __________ is the process of assessing the degree to which a proposed system solves business problems or takes advantage of business opportunities.
Answer: Operational feasibility
Diff: 2 Page Ref: 138
118) __________ is the process of assessing the degree to which the potential time frame and completion dates for all major activities within a project meet organizational deadlines and constraints for affecting change.
Answer: Schedule feasibility
Diff: 2 Page Ref: 138
119) __________ is the process of assessing potential legal and contractual ramifications due to the construction of a system.
Answer: Legal and contractual feasibility
Diff: 1 Page Ref: 139
120) __________ is the process of evaluating how key stakeholders within the organization view the proposed system.
Answer: Political feasibility
Diff: 2 Page Ref: 138
121) A __________ is a peer group review of any product created during the systems development process.
Answer: walkthrough
Diff: 2 Page Ref: 145
122) Referencing a walkthrough meeting, the __________ plans the meeting and facilitates a smooth meeting process.
Answer: coordinator
Diff: 3 Page Ref: 145
123) Referencing a walkthrough meeting, the __________ ensures that the work product adheres to organizational technical standards.
Answer: standards bearer
Diff: 3 Page Ref: 145
124) Referencing a walkthrough meeting, the __________, reviews the work product in terms of future maintenance activities.
Answer: maintenance oracle
Diff: 3 Page Ref: 145
Match each of the following terms with its definition.
125) A process of identifying the financial benefits and costs associated with a development project.
Answer: a
Diff: 2 Page Ref: 127
126) The process of assessing the degree to which the potential time frame and completion dates for all major activities within a project meet organizational deadlines and constraints for affecting change.
Answer: e
Diff: 2 Page Ref: 138
127) The process of evaluating how key stakeholders within the organization view the proposed system.
Answer: d
Diff: 2 Page Ref: 139
128) The process of assessing the degree to which a proposed system solves business problems or takes advantage of business opportunities.
Answer: c
Diff: 2 Page Ref: 138
129) The process of assessing potential legal and contractual ramifications due to the construction of a system.
Answer: b
Diff: 2 Page Ref: 139
130) A process of assessing the development organization’s ability to construct a proposed system.
Answer: f
Diff: 2 Page Ref: 135
Match each of the following terms with its definition.
131) A cost associated with an information system that can be measured in dollars and with certainty.
Answer: f
Diff: 2 Page Ref: 130
132) A benefit derived from the creation of an information system that can be measured in dollars and with certainty.
Answer: e
Diff: 2 Page Ref: 129
133) A cost resulting from the ongoing evolution and use of a system.
Answer: d
Diff: 2 Page Ref: 131
134) A cost associated with project start-up and development, or system start-up.
Answer: c
Diff: 2 Page Ref: 130
135) A cost associated with an information system that cannot be easily measured in terms of dollars or with certainty.
Answer: b
Diff: 2 Page Ref: 130
136) A benefit derived from the creation of an information system that cannot be easily measured in dollars or with certainty.
Answer: a
Diff: 2 Page Ref: 130
Match each of the following terms with its definition.
137) The rate of return used to compute the present value of future cash flows.
Answer: b
Diff: 2 Page Ref: 133
138) A major outcome and deliverable from the project initiation and planning phase that contains the best estimate of a project’s scope, benefits, costs, risks, and resource requirements.
Answer: a
Diff: 2 Page Ref: 126
139) A peer group review of any product created during the system development process.
Answer: q
Diff: 2 Page Ref: 145
140) The current value of a future cash flow.
Answer: j
Diff: 2 Page Ref: 133
141) A cost associated with an information system that can be measured in dollars and with certainty.
Answer: o
Diff: 2 Page Ref: 130
142) A benefit derived from the creation of an information system that can be measured in dollars and with certainty.
Answer: n
Diff: 2 Page Ref: 129
143) A cost resulting from the ongoing evolution and use of a system.
Answer: k
Diff: 2 Page Ref: 131
144) A cost associated with project startup and development or system startup.
Answer: h
Diff: 2 Page Ref: 130
145) A cost associated with an information system that cannot be easily measured in terms of dollars or with certainty.
Answer: e
Diff: 2 Page Ref: 130
146) A benefit derived from the creation of an information system that cannot be easily measured in dollars or with certainty.
Answer: d
Diff: 2 Page Ref: 130
147) A document prepared for the customer during project initiation and planning that describes what the project will deliver and outlines generally at a high level all work required to complete the project.
Answer: m
Diff: 2 Page Ref: 126
148) A process of identifying the financial benefits and costs associated with a development project.
Answer: c
Diff: 2 Page Ref: 127
149) The process of assessing the degree to which the potential time frame and completion dates for all major activities within a project meet organizational deadlines and constraints for affecting change.
Answer: l
Diff: 2 Page Ref: 138
150) The process of evaluating how key stakeholders within the organization view the proposed system.
Answer: i
Diff: 2 Page Ref: 139
151) The process of assessing the degree to which a proposed system solves business problems or takes advantage of business opportunities.
Answer: g
Diff: 2 Page Ref: 138
152) The process of assessing potential legal and contractual ramifications due to the construction of a system.
Answer: f
Diff: 2 Page Ref: 139
153) A process of assessing the development organization’s ability to construct a proposed system.
Answer: p
Diff: 2 Page Ref: 135
For each of the following walkthrough roles, match it with its description.
154) This person reviews the work product in terms of future maintenance activities.
Answer: b
Diff: 2 Page Ref: 145
155) This person ensures that the work product adheres to organizational standards.
Answer: e
Diff: 2 Page Ref: 145
156) This person plans the meeting and facilitates a smooth meeting process.
Answer: a
Diff: 2 Page Ref: 145
157) This person describes the work product to the group.
Answer: c
Diff: 2 Page Ref: 145
158) This person ensures that the work product meets the needs of the project’s customers.
Answer: f
Diff: 2 Page Ref: 145
159) This person takes notes and records decisions or recommendations made by the group.
Answer: d
Diff: 2 Page Ref: 145
Match each of the following feasibility criteria with its purpose.
160) To gain an understanding of the degree to which the proposed system will likely solve the business problems or take advantage of the opportunities outlined in the systems service request or project identification study.
Answer: c
Diff: 2 Page Ref: 138
161) To gain an understanding of the organization’s ability to construct the proposed system.
Answer: f
Diff: 2 Page Ref: 135
162) To provide an understanding of any potential legal ramifications due to the construction of the system.
Answer: b
Diff: 2 Page Ref: 139
163) To evaluate how key stakeholders within the organization view the proposed system.
Answer: d
Diff: 2 Page Ref: 139
164) To provide an understanding of the likelihood that all potential time frames and completion date schedules can be met, and that meeting these dates will be sufficient for dealing with the needs of the organization.
Answer: e
Diff: 2 Page Ref: 138
165) To identify the financial benefits and costs associated with the development project.
Answer: a
Diff: 2 Page Ref: 127
166) Briefly identify and define the six major categories of feasibility.
Answer: The six feasibility categories are economic, technical, operational, schedule, legal and contractual, and political. The specifics of a particular project will determine the emphasis placed on each of the feasibility criteria. Economic feasibility seeks to identify the financial benefits and costs associated with the project. Technical feasibility seeks to determine if the organization is capable of developing the new system. Operational feasibility examines the degree of likelihood that the candidate system will be able to solve the business problem or take advantage of opportunities. Schedule feasibility examines the likelihood that all potential time frame and completion date schedules can be met. Legal and contractual feasibility tries to assess the potential legal ramifications due to the construction of the new system. Determining stakeholder’s views of the candidate system is the intent of political feasibility.
Diff: 2 Page Ref: 127
167) Briefly identify three commonly used economic cost-benefit analysis techniques.
Answer: Break-even analysis (BEA) is the process of finding the amount of time required for the cumulative cash flow from a project to equal its initial and ongoing investment. Net present value (NPV) uses a discount rate determined from the company’s cost of capital to establish the present value of a project. Return on investment (ROI) is the ratio of the net cash receipts of the project divided by the cash outlays of the project. A tradeoff analysis can be made between competing projects.
Diff: 3 Page Ref: 133-134
168) What is a Project Scope Statement and Baseline Project Plan? How are they different?
Answer: The Baseline Project Plan and the Project Scope Statement are the major outcomes and deliverables for the project initiation and planning phase. All information collected and analyzed during this phase is contained in the BP. This plan reflects the best estimate of the project’s scope, benefits, costs, risks, and resource requirements. It also specifies detailed project activities for the following phase and more general specifications for the remaining phases. The BPP can be used by the project selection committee to determine the project worth – accept, reject, or modify. The project Scope Statement is a document prepared for the customer during project initiation and planning that describes what the project will deliver and outlines generally at a high level all work required to complete the project. The PSS consists of a high-level summary of the BP. While the actual role of the PSS can vary, the PSS can be used by the analyst and the customer to gain an understanding of the project.
Diff: 3 Page Ref: 126-127
169) Describe the differences between tangible and intangible benefits and costs, and between one-time and recurring benefits and costs.
Answer: A tangible benefit refers to a benefit derived from the creation of an information system that can be measured in dollars and with certainty. Examples include reduced personnel expenses, lower transaction costs, and higher profit margins. Intangible benefit refers to a benefit derived from the creation of an information system that cannot be easily measured in dollars or with certainty. Examples include competitive necessity, promotion of organizational learning and understanding, and improved asset utilization. While tangible costs are costs associated with an information system that can be measured in dollars and with certainty, intangible costs are costs associated with an information system that cannot be easily measured in terms of dollars or with certainty. Hardware costs, labor costs, and operational costs are tangible costs. Loss of customer goodwill, employee morale, and operational inefficiency are intangible costs. One-time costs are costs associated with project start-up and development or system start-up. This type of cost includes hardware and software purchases, user training, and site preparation. Recurring costs are costs resulting from the ongoing evolution and use of a system. New software and hardware leases, incremental communications, and incremental data storage expense are recurring costs.
Diff: 3 Page Ref: 129-131
170) Briefly define walkthrough and describe the role of each participant.
Answer: A walkthrough is a peer group review of any product created during the systems development process. During the review users, management, and the development group participate through various roles. These roles are coordinator, presenter, user, secretary, standards bearer, and maintenance oracle. The coordinator is the person who plans the meeting and facilitates a smooth meeting process. The presenter is the individual who describes the work product to the group. Ensuring that the work product meets the needs of the project’s customers is the role fulfilled by the user. The person taking notes and recording decisions or recommendations made by the group is the secretary. The standards bearer role is to ensure that the work product adheres to organizational technical standards. The maintenance oracle is the individual who reviews the work product in terms of future maintenance activities.
Diff: 2 Page Ref: 145-146
171) Assume a proposed system has a useful life of 5 years, one-time costs of $50,000, recurring costs of $25,000 per year, and tangible benefits of $45,000 per year. If the cost of capital is 10%, what is the overall NPV? Overall ROI? Break-even point?
Answer: The overall NPV is $25,816; the overall ROI is .18, and break-even occurs in year 4.
Diff: 2 Page Ref: 133
172) Assume a proposed system has a useful life of 5 years, one-time costs of $250,000, recurring costs of $80,000 per year, and tangible benefits of $175,000 per year. If the cost of capital is 12%, what is the overall NPV? Overall ROI? Break-even point?
Answer: The overall NPV is $92,454; the overall ROI is .17, and break-even occurs in year 4.
Diff: 2 Page Ref: 133
173) Assume a proposed system has a useful life of 5 years, one-time costs of $1,000,000, recurring costs of $250,000 per year, and tangible benefits of $750,000 per year. If the cost of capital is 10%, what is the overall NPV? Overall ROI? Break-even point?
Answer: The overall NPV is $895,393; the overall ROI is .46, and break-even occurs in year 3.
Diff: 2 Page Ref: 133
174) Assume a proposed system has a useful life of 5 years, one-time costs of $50,000, recurring costs of $25,000 per year, and tangible benefits of $35,000 per year. If the cost of capital is 10%, what is the overall NPV? Overall ROI? Break-even point?
Answer: The overall NPV is $12,092, and the overall ROI is negative. Based on the information given, this project will not break-even during its useful life.
Diff: 2 Page Ref: 133
175) Assume a proposed system has a useful life of 5 years, one-time costs of $1,000,000, recurring costs of $250,000 per year, and tangible benefits of $750,000 per year. If the cost of capital is 10%, what is the overall NPV? Overall ROI? Break-even point?
Answer: The overall NPV is $895,393 and the overall ROI is .46. The project breaks even in year 3.
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
