3.11 Checklist. Suppose that you are trying to choose which of two IT projects to accept. Your company employs three primary selection criteria for evaluating all IT projects: (1)

proven technology, (2) ease of transition, and (3) projected cost savings.

One option, Project Demeter, is evaluated as:

Technology high Ease of transition low Projected cost savings high TABLE 3.11 Discounted Cash Flows and NPV (II)

Year Inflows Outflows Net Flow Discount Factor NPV 0 $ 0 $200,000 $(200,000) 1.0000 $(200,000)

1 0 50,000 (50,000) .8696 (43,480)

2 50,000 0 50,000 .7561 37,805 3 100,000 0 100,000 .6575 65,750 4 200,000 0 200,000 .5718 114,360 5 75,000 0 75,000 .4972 37,290 Total $ 11,725

 113 The second option, Project Cairo, is evaluated as:

Technology medium Ease of transition high Projected cost savings high Construct a table identifying the projects, their evaluative criteria, and ratings. Based on your analysis, which project would you argue in favor of adopting? Why?