Projects W, X, Y, and Z are each being screened according to four criteria: potential return on investment, lack of technological risk, environmental “friendliness,” and service to community:

• Project W: return, high; lack of risk, medium; environment, medium; service, low.

• Project X: return, medium; lack of risk, high; environment, medium; service, low.

• Project Y: return, medium; lack of risk, medium; environment, high; service, high.

• Project Z: return, medium; lack of risk, medium; environment, high; service, low.

Create a scheme for screening the projects, assuming equal weight for all criteria. Which project comes out best, which worst?

12. For the previous four projects, assign scores of high = 3, medium = 2, and low = 1. Assume the criteria are weighted: potential return on investment = 0.3, lack of technological risk = 0.3, environmental “friendliness” = 0.3, and service to community = 0.1. Now which projects come out best and worst?

13. Compare the ECV and B/C methods for evaluating projects.

14. What is the expected commercial value of a project involving the launch of a new product with an estimated development cost of $15M, launch cost of $0.8M, and NPV for the future stream of earnings of $45M if the probabilities for success are 70 percent in development and 50 percent in the market?

15. A project has three phases—concept, development, and launch—that are expected to cost

$5M, $15M, and $4M, respectively. The likelihoods of success for the three phases are 0.5, 0.8, and 0.7, respectively. If the estimated NPV of future earnings is $90M, what is the ECV for the project? (Answer: $11.1M.)