M0084 – Sistem Informasi dalam Manajemen Running Case – Group Assignment DIRT BIKE – USA Analyzing the Return on Dirt Bikes’ New System Investment Software requirements: 1. Spreadsheet software 2. Word processing software 3. Electronic presentation software Questions Dirt Bikes management would like to analyze the return on its investment in its employee training and skills tracking system. The system runs on the human resources specialists’ PCs using PC database software. Since the entire corporate administrative staff recently received new desktop PC systems with database and other productivity software, there are no additional hardware and software purchase costs. The main costs are the initial cost of designing and implementing the database (business staff cost of $5,000; information systems staff cost $15,000), gathering and adding employee educational, performance rating, and training data to the database ($5500 initial data conversion cost plus $1000 annual data entry costs) and ongoing maintenance and support ($3000 annually). Human resources staff members believe the new application could save each of them two hours of work per week. (Their annual salaries are $37,000 and $42,000 each.) The company would also save about $ 11,000 annually in employee recruiting costs because it would be able to fill many vacant positions with existing employees and thereby reduce its costs for recruiting outside the company. 1. Prepare a report for management analyzing the return on the investment for this system over a five–year period using the following capital budgeting models: Net present value, return on investment (ROI), internal rate of return (IRR), costbenefit ratio, profitability index, and payback method. Assume a 5% interest rate for your net present value calculations. The system will not be installed until the end of 2003 so benefits should only be calculated for 2004-2008. Use spreadsheet software for your calculations. 2. Use electronic presentation software to summarize your findings for management.