Background Recent company growth required the construction of a new Divisional Office that houses management, sales/marketing, human resources, finance, and accounting personnel for the division. The IT department researched appropriate telephony systems for the new office that provide necessary functionality for the present, accommodate future growth, and satisfy the cost requirements of the Finance Department. After careful consideration, a VoIP system was selected to support 900 lines. The system should be scalable to grow with the company, regardless of the size. Historically, Telephone Systems purchase costs include the cost of the first year of maintenance. The system will be installed in November, 2010 at the new Divisional office. The final decision whether to buy or lease the system has not been made yet and the decision is dependent upon a life cycle NPV analysis. The Finance department requires the completion of 7-year Life Cycle Analysis (LCA) using present value factors for future year operating costs and including an allowance for inflation. Straight-line depreciation is used for the depreciation calculations Organizational benefits of the technology were addressed during the selection process. The main benefits are reiterated below. The major benefit addressed by this case is cost avoidance through selecting the appropriate method of financing the project. Tangible benefits: n Increased services for customers n Decreased cost of service provided n Savings from structural changes n Cost avoidance – reduction of operating costs in the future Intangible benefits: n Better customer or staff satisfaction n Enhanced ability for the customer to meet their business goals n Improved communications Deliverables – This is what the instructor expects in your submission. 1. Memo, using the template provided in Doc Sharing, addressed to the Chief Information Officer (CIO) of the company that recommends either the lease option or the buy option for the new phone system based on your NPV analysis. Part of the discussion should compare the advantages and disadvantages of leasing versus buying by researching which option the other companies have used and/or by researching recommendations (the links in the Webliography should provide you with resources to research leasing vs. buying and vice versa) 2. Completed NPV analysis worksheet as an attachment. (Students should enter the required information in the cells highlighted in yellow.) 3. Since this memo requires research, you will be required to have APA citations and references for this assignment.
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