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Chief Information Officer

Real-Life Activities

Real-Life Math -- Solution

As CIO, you have to decide whether to upgrade computer software or purchase a new system. First, you must decide which choice is the most economical. Then you will weigh other decisions such as the quality and speed of each type of software.

1. After 2 years, how much will you have spent on the Danga computer system?

Cost to upgrade Danga software: $1,050 per computer
10 computers x $1,050 = $10,500

In 2 years, you will need to upgrade again for an additional $200 per computer.

10 computers x $200 = $2,000

Total cost over two years:
$10,500 + $2,000= $12,500

2. After 2 years, how much will you have spent on the Cat computer system?

Cost to purchase new computers: $1,200 each
10 x $1,200 = $12,000

Cost to purchase new software: $250 each
10 x $250 = $2,500

$12,000 + $2,500 = $14,500

3. Which system will cost less after 2 years?

The Danga system will cost $12,500 after 2 years. The Cat system will cost $14,500 after 2 years. The Danga system will cost less over this period of time.