Information Technology - Issues and effects of changes to information
systems: economic effects arising from costs of upgrading equipment
Cost of upgrading equipment. Image.
An important part of an organisation's cost/benefit analysis when deciding
on a new system will involve the cost of any new equipment. New or upgraded
versions of both hardware and software may be required. Naturally, if it is
going to cost much more to buy new equipment, than the money that will be
made when the new system is implemented, it is likely that the organisation
will decide against it. Organisations need to consider the initial purchase
price as well as any ongoing maintenance costs. These costs may have an
immediate impact on cash flow or a longer-term impact on other company
Read the following case study information and answer/discuss the questions
The WellRead Bookclub sends out a weekly news sheet to each of its 200 members (membership is $5 per year). The news sheet is usually produced in black and white on A4 paper. The club President, Geri, needs to buy a new printer to meet the needs of the news sheet production. She has the option of an inkjet or a laser printer. As the club has no other operating expenses, this will be the major purchase for the year.
1. Suggest which alternative may be more appropriate. Justify your answer in terms of initial and ongoing costs.
2. What financial impact might the purchase of the new printer have on the clubs cash flow both in the short and long term?
3. What are some options open to Geri to deal with the financial impact on the club and its members of the new printer?
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