Health Informatics - Economic Feasibility

Running head: HEALTH INFORMATICS
Health Informatics
Name of the Student:
Name of the University:
Author’s Note:

1HEALTH INFORMATICS
Economic Feasibility
The economic feasibility of the project investment can be well done based on the
cumulative benefits that the project is well expected. The key aim of the economic feasibility
would be assessing the benefits that the organisation would be getting by installing or activating
the proposed Medical Director System. The electronic scheduling system will be though helping
the organisation would be easy, fast and more efficient process. The costs that would be incurred
in the project would be incurred on an annual basis and the benefits from the same would also be
accounted for the same would be assessed (Levin and Hallgren 2017). It is well assessed that the
proposed system would be applicable for a sum of five years. Costs that would be incurred in the
form of tangible costs which would be well including employee cost, IT Staff cost, hardware and
equipment (purchase and installation), license & fees. The cost breakup would be well shown
based on the above classified heads (Su et al., 2018). The classification of expenses has been
well done by allocating the classified expenses into percentage terms as follows:
 Employees: 20% of total cash outflows every year
 IT Staff: 20% of total cash outflows every year
 Software: 30% of total cash outflows every year
 Training: 10% of total cash outflows every year
 License and Fees: 10% of total cash outflows every year

2HEALTH INFORMATICS
Economic Feasibility Analysis
Particulars Year 0 1 2 3 4 5
Initial Investment ($37,500)
(Hardware & Equipment’s)
Cash Inflows (Benefits) $2,500 $4,150 $5,800 $9,850 $16,600 $48,800
Cash Outflows
Employees $0.00 $2,350 $2,000 $2,500 $2,100 $1,780
IT Staff $0.00 $2,350 $2,000 $2,500 $2,100 $1,780
Software $0.00 $4,700 $4,000 $5,000 $4,200 $3,560
Training $0.00 $1,175 $1,000 $1,250 $1,050 $890
License and Fees $0.00 $1,175 $1,000 $1,250 $1,050 $890
Total Cash Outflows $37,500 $11,750 $10,000 $12,500 $10,500 $8,900
Net Cash Flows ($35,000) ($7,600) ($4,200) ($2,650) $6,100 $39,900
Discount Factor @ 10% 1.00 0.91 0.83 0.75 0.68 0.62
Discounted Cash Flows ($35,000) ($6,909) ($3,471) ($1,991) $4,166 $24,775
Net Present Value ($18,430)
Internal Rate of Return -1.64%
The initial sum of investment in the project would be around $37,500 and the same would be
treated as the cost incurred for purchasing hardware and equipment. The assessment of the
project would be well carried with the help of Payback Project Tool which well shows the range
of cash outflows and the cumulative cash benefits that the company expects to receive (Siziba.
and Hall 2019). On the other hand the assessment of the project from an economic feasibility
perspective has been well done with the help of the net present value and internal rate of return
approach for the project.

3HEALTH INFORMATICS
The economic feasibility has been well done by taking a discount rate of 10% which well reflects
the required return that is required from an investment and the same has been incorporated. The
discount rate has been well computed by using a factor of 10% that is 1/(1+10%)^1 and similarly
for the rest of years. The net present value or the net return was calculated to be around -$18,430
and the percentage return on investment is expected to be around -1.64%.

4HEALTH INFORMATICS
Bibliography
Levin, V. and Hallgren, A., 2017. The choice of capital budgeting techniques: a human capital
approach.
Su, S.H., Lee, H.L., Chou, J.J., Yeh, J.Y. and Thi, M.H.V., 2018. Application and effects of
capital budgeting among the manufacturing companies in Vietnam. International Journal of
Organizational Innovation (Online), 10(4), pp.111-120.
Siziba, S. and Hall, J.H., 2019. The evolution of the application of capital budgeting techniques
in enterprises. Global Finance Journal, p.100504.
Nawaiseh, M.E., Al-nawaiseh, H., Attar, M.D. and Al-nidawy, A., 2017, September. The Use of
Capital Budgeting Techniques as a Tool for Management Decisions: Evidence from Jordan.
In International Conference on Engineering, Project, and Product Management (pp. 301-309).
Springer, Cham.