IPA IP 2023 Question 4
A question IPA Japan published in 令和5年度 ITパスポート試験 公開問題 問4, translated into English. ITPEC is based on the same exams.
The profitability of the ASP usage method and the in-house center usage method with in-house development (hereinafter referred to as the “in-house method”) is compared. Under the conditions below, the expected profit (benefit amount − cost) of the ASP usage method becomes larger than that of the in-house method when the initial investment amount of the in-house method exceeds how much, in 10,000 yen? Here, the comparison period is 5 years.
~ [Conditions] (amounts in 10,000 yen)
~ • | For both methods, the benefit amount from using the system is 500/year.
~ • | For the ASP usage method, the initial cost is 0, and the usage fee is 300/year.
~ • | For the in-house method, the initial investment amount is depreciated by the straight-line method, and the residual book value after 5 years is 0. In addition, the operating cost is 100/year.
~ • | Interest and other costs are not considered.
Explanation
1,000 (10 million yen) — compare the two methods' profit over the 5 years and find the initial investment at which they are equal.
Amounts in ten thousand yen, over 5 years:
- •ASP: benefit 500 × 5 = 2,500, usage fee 300 × 5 = 1,500, initial cost 0, profit 2,500 − 1,500 = 1,000
- •In-house, initial investment X: straight-line depreciation to a residual value of 0 spreads all of X over the 5 years as cost, operating cost 100 × 5 = 500, profit 2,500 − 500 − X = 2,000 − X
- •ASP is larger when 1,000 > 2,000 − X, that is X > 1,000
Per year it is the same: ASP 500 − 300 = 200, in-house 500 − 100 − X ÷ 5, equal at X = 1,000. At exactly 1,000 the two profits are equal, so ASP is ahead once the investment exceeds 1,000 (10 million yen).
Answer (b)
Why not others:
- •(a) 500 — the in-house profit is then 2,000 − 500 = 1,500, still more than ASP's 1,000
- •(c) 1,500 and (d) 2,000 — ASP is already ahead at these amounts, but it overtakes the in-house method as soon as the investment passes 1,000
Key rule: With straight-line depreciation to zero, the whole initial investment becomes cost over the period; compare total profit (or profit per year) and solve for the amount at which the two methods break even.
System Planning · AI-written, may contain errors
This question comes from the past questions IPA Japan publishes, translated into English by ITPEC Practice. ITPEC Practice is an independent study tool and is not affiliated with IPA or ITPEC. See the original paper (PDF) or Report an issue.