Exam 15: Financial-Analysis-Tools

Which is an example of variable costs?

Indirect costs,or overhead expenses,cannot be attributed to the development of a particular information system.

Direct costs usually are more difficult to identify and predict than indirect costs.

Operational costs are incurred only once at the time a system is developed or acquired.

The _____ value 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.

Some managers are critical of payback analysis because it places all the emphasis on early costs and benefits and ignores the benefits received after the payback period.

Direct costs are costs that can be associated with the development of a specific system.

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

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

Provide examples of cost-avoidance benefits.

What term is used for the charging of indirect IT department costs based on the resources used by an information system?

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

When conducting a payback analysis,the time it takes for the accumulated benefits of an information system to equal the accumulated costs of developing and operating the system is calculated.

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

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

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

In present value analysis,most companies require a rate of return that is higher than the discount rate because of the degree of risk in any project compared with investing in a bond.

Identify an example of direct costs.

Which concept includes ongoing support and maintenance costs as well as acquisition costs?

Identify an example of developmental costs.