Exam 15: Financial Analysis Tools

____________________ is a percentage rate that measures profitability by comparing the total net benefits (the return) received from a project to the total costs (the investment) of the project.

The period between the beginning of systems operation and the point when operational costs are rapidly increasing is called the ____________________ of the system.

Positive benefits increase revenues, improve services, or otherwise contribute to an organization as a direct result of a new information system.

Fixed costs are costs that are relatively constant and do not depend on a level of activity or effort.

When comparing the net present values of projects, all things being equal, the project with the lowest present value is the best investment.

The _____ of a future dollar is the amount of money that, when invested today at a specified interest rate, grows to exactly one dollar at a certain point in the future.

Intangible costs are costs for which a specific dollar value can be assigned.

With a variable charge method based on resource usage, indirect IT department costs are _____.

With a fixed charge method, indirect IT department costs are _____.

Unlike payback analysis, present value analysis considers just the earlier values, and not all the costs and benefits.

Cost-avoidance benefits refer to expenses that would be necessary if a new system is not installed.

The time it takes to recover an information system's costs is called the ____________________.

A(n) ____________________ is a technique that uses accounting entries to allocate the indirect costs of running an IT department.

When IT department costs are not charged to other departments, the information systems department is called a(n) ____________________, because it generates accounting charges with no offsetting credits for IT services.

The concept that a future monetary value is related to a specific value invested today is known as the time value of money, and it is the basis of a technique called ____________________.

Development costs are incurred after a system is implemented and continue while the system is in use.

____ means that the projected benefits of a proposed system outweigh the estimated costs.

The ROI (return on investment) technique recognizes the timing of costs and benefits.

____________________ is the process of comparing the anticipated costs of an information system to the anticipated benefits.

To help perform present value analysis, adjustment factors for various interest rates and numbers of years are calculated and printed in tables called ____________________.