Response to the following problem:
Smart Bank processes checks for smaller banks and insurance companies. When a customer complains that a check was not deposited to its account, a Smart Bank clerk takes the complaint over the phone and fills out a paper form. The complaint form triggers a long search through piles of canceled checks in a warehouse to find the check in question. Smart Bank then compares this check to its computer and paper records.
Smart Bank is considering moving this process to the Web. When a customer has a question, an employee simply uses a Web browser and a password to access Smart Bank's databases. The customer's employee pulls up a computerized image of the check in question to verify the amount and then queries Smart Bank's databases to locate the mistake. If required, a credit to the customer's account can be issued immediately.
The Web-based system will require the bank to invest $83,000 in a new server and check-scanning equipment. eNow! consultants will charge $110,000 for the software and consulting fees to get the system running. The system will also require increasing the bank's Internet capacity. The present value of this cost is $20,000.
Smart Bank has identified two benefits of this project. First, several bank clerks freed from searching through stacks of canceled checks will be reassigned, which will lead to cost savings with a present value of $173,000. Second, the new system's additional capacity will enable Smart Bank to accept more check-processing business, which should lead to additional profits with a present value of $43,200.
Required:
Does a cost-benefits analysis justify the Web-based system? Explain why, showing supporting calculations.