M03 Assignment - Simulation - Financial Analysis

Purpose

The purpose of this assignment is to check your understanding of the readings from the module. This Simulation Worksheet will focus on Net Present Value, Planned Value, Earned Value, Actual Cost, and Budget at Completion. The Simulation Worksheet contains multiple questions across two (2) tabs in the Excel Spreadsheet. Each tab on the spreadsheet includes a different activity.

• Tab 1 SIM 1 - Given the information in the spreadsheet, answer the questions about the project's financial stability.
• Tab 2 SIM 2 - Best Buy has the opportunity to invest in 2 projects.
  • Project A requires an investment of $2M which will give a return of $500000 each year for five years.
  • Project B requires an investment of $750000 which will give a return of $100000, $150000, $200000, $250000, and $ 250000 for the next five years.
  • Calculate the Net Present Value, which can be used to decide which opportunity is better and should be invested in.

Answer the questions on the activities from topics presented in this module in the two (2) tabs.

Simulation: Given the following information for a one-year project, answer the following questions. Recall that PV is the planned value, EV is the earned value, AC is the actual cost, and BAC is the budget at completion. PV 22,000 EV 20,000 AC 25,000 BAC 120,000 Questions: Response What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project? How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget? Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned? Use the SPI to estimate how long it will take to finish this project? Sketch the earned value chart for the project. Place sketch below

Best Buy has the opportunity to invest in 2 projects. Project A requires an investment of $2M which will give a return of $500000 each year for 5 years. Project B requires an investment of $750000 which will give a return of $100000, $150000, $200000, $250000 and $ 250000 for the next 5 years. Then Calculate the Net Present Value which can be used to decide which opportunity is better and should be invested in.

Project A Project B Discount Rate 10% Discount Rate 10% Initial Investment $ 2,000,000 Initial Investment $ 750,000 Year Cash Flows Discounting Factor Year Cash Flows Discounting Factor 1 1 2 2 3 3 4 4 5 5 Net Present Value Formula Net Present Value Formula Net Present Value Net Present Value

Which project should Best Buy Invest in?