1. You are the head of the project selection team at SIMSOX. Your team is considering three different projects. Based on past history, SIMSOX expects at least a rate of return of 20 percent. Your financial advisors predict inflation to remain at 3 percent into the foreseeable future. Given the following information for each project, which one should be SIMSOX first priority? Should SIMSOX fund any of the other projects? If so, what should be the order of priority based on return on investment? NPV Project: Dust Devils Year Revenue Stream 0 Investment Net flow Discount Factor 500,000 250.000 350,000 Total: Project: Ospry Year Investment Net flow NPV Revenue Stream Discount Factor 250,000 2 75,000 T 75.000 75,000 L Total: Investment Net flow NPV Discount Factor 75,000 Project: Voyagers Year Revenue Stream 0 15,000 2 T 25.000 50,000 50,000 5 150,000 L Total: Chapter 2 Organisation Strategy and Project Selection 2. The Custom Bike Company has set up a weighted scoring matrix for evaluation of potential projects. Below are five projects under consideration. a. Using the scoring matrix below, which project would you rate highest? Lowest? b. If the weight for "Strong Sponsor" is changed from 2.0 to 5.0, will the project selection change? What are the three highest weighted project scores with this new weight? c. Why is it important that the weights mirror critical strategic factors? Criteria Weight Strong sponsor Supports business strategy Urgency 10% of sales from new products Competition Fill market gap Weighted total on Project 1 9 3 NNN o 6 8 Project 2 Project 3 Project 4 Project 5 1 0 5 3 10 1 6 6 8 8 9 0 3 10 10