PMT472 APPLIED PROJECT MANAGEMENT 1.3 ASSIGNMENT: WEEK 1 EXERCISES
CH. 2 EXERCISE 2
Two new software projects are proposed to a young, start-up company. The Alpha project will cost $150,000 to develop and is expected to have an annual net cash flow of $40,000. The Beta project will cost $200,000 to develop and is expected to have an annual net cash flow of $50,000. The company is concerned about their cash flow.
NOTE: Payback period in years = Investment/Annual Savings
Project Name	Investment	Annual Savings	Payback Period
Alpha	$150,000	$40,000	(Type Excel formula to calculate result)
Beta	$200,000	$50,000	(Type Excel formula to calculate result)
Using the payback period, which project is better from a cash flow standpoint? Why?
(Enter response)

CH. 2 EXERCISE 3
A five-year project has a projected net cash flow of $15,000, $25,000, $30,000, $20,000, and $15,000 in the next five years. It will cost $50,000 to implement the project. If the required rate of return is 20 percent, conduct a discounted cash flow calculation to determine the NPV.
NOTE: Excel formula for NPV is "=negative investment amount + NPV(required rate of return,net cash flow year 1, net cash flow year 2, net cash flow year 3,...)"; i.e. "=-50000+NPV(.2,15000,25000,...)"
Year	Investment	Revenue Stream
0	$50,000
1		$15,000
2		$25,000
3		$30,000
4		$20,000
5		$15,000
	NPV	(Type Excel formula to calculate result)

PMT472 APPLIED PROJECT MANAGEMENT 1.3 ASSIGNMENT: WEEK 1 EXERCISES
CH. 2 EXERCISE 4
You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. The following chart shows the cash information for each project.
NOTE: Use the Year 0 net cash flow as the investment amount; i.e. -$225,000; i.e. "=-225000+NPV(.18,-190000,...)"
Omega	Alpha
Year	Net Cash Flow	Year	Net Cash Flow
0	-$225,000	0	-$300,000
1	-$190,000	1	-$50,000
2	$150,000	2	$150,000
3	$190,000	3	$200,000
4	$215,000	4	$250,000
5	$175,000	5	$150,000
6	$197,000	6	$180,000
7	$70,000	7	$90,000
NPV	(Type Excel formula to calculate result)	NPV	(Type Excel formula to calculate result)
Which of the two projects would you fund if the decision is based only on financial information? Why?
(Enter response)

PMT472 APPLIED PROJECT MANAGEMENT 1.3 ASSIGNMENT: WEEK 1 EXERCISES
CH. 2 EXERCISE 5
You are the head of the project selection team at SIMSOX. Your team is considering three different projects. Based on history, SIMSOX expects at least a rate of return of 20 percent.
Dust Devils	Osprey	Voyagers
Year	Investment	Revenue Stream	Year	Investment	Revenue Stream	Year	Investment	Revenue Stream
0	$500,000	$0	0	$250,000	$0	0	$75,000	$0
1		$50,000	1		$75,000	1		$15,000
2		$250,000	2		$75,000	2		$25,000
3		$350,000	3		$75,000	3		$50,000
			4		$50,000	4		$50,000
						5		$150,000
	NPV	(Type Excel formula to calculate result)		NPV	(Type Excel formula to calculate result)		NPV	(Type Excel formula to calculate result)
Given the above information for each project, which one should be SIMSOX's first priority? Should SIMSOX fund any of the other projects? If so, what should be the order of priority based on return on investment?
(Enter response)

PMT472 APPLIED PROJECT MANAGEMENT 1.3 ASSIGNMENT: WEEK 1 EXERCISES
CH. 2 EXERCISE 6
You are the head of the project selection team at Broken Arrow Records. Your team is considering three different recording projects. Based on history, Broken Arrow expects at least a rate of return of 20 percent.
Time Fades Away	On the Beach	Tonight's the Night
Year	Investment	Revenue Stream	Year	Investment	Revenue Stream	Year	Investment	Revenue Stream
0	$600,000	$0	0	$400,000	$0	0	$200,000	$0
1		$600,000	1		$400,000	1		$200,000
2		$75,000	2		$100,000	2		$125,000
3		$20,000	3		$25,000	3		$75,000
4		$15,000	4		$20,000	4		$20,000
5		$10,000	5		$10,000	5		$10,000
	NPV	(Type Excel formula to calculate result)		NPV	(Type Excel formula to calculate result)		NPV	(Type Excel formula to calculate result)
Given the above information for each project, which one should be Broken Arrow's first priority? Should Broken Arrow fund any of the other projects? If so, what should be the order of priority based on return on investment?
(Enter response)

PMT472 APPLIED PROJECT MANAGEMENT 1.3 ASSIGNMENT: WEEK 1 EXERCISES
CH. 2 EXERCISE 7
The Custom Bike Company has set up a weighted scoring matrix for the evaluation of potential projects. The following are five projects under consideration.
NOTE: The Excel formula for the weighted total is "=SUMPRODUCT(weight row,respective project rating row)"; Hint: Project 1 weighted total is 68.
Criteria	Strong Sponsor	Supports Business Strategy	Urgency	10% of Sales from New Products	Competition	Fill Market Gap	Weighted Total
Weight	2.0	5.0	4.0	3.0	1.0	3.0
Project 1	9	5	2	0	2	5	(Type Excel formula to calculate result)
Project 2	3	7	2	0	5	1	(Type Excel formula to calculate result)
Project 3	6	8	2	3	6	8	(Type Excel formula to calculate result)
Project 4	1	0	5	10	6	9	(Type Excel formula to calculate result)
Project 5	3	10	10	1	8	0	(Type Excel formula to calculate result)
Using the screening matrix above, which project would you rate highest? Lowest?
(Enter response)
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?
(Enter response)
Why is it important that the weights mirror critical strategic factors?
(Enter response)

PMT472 APPLIED PROJECT MANAGEMENT 1.3 ASSIGNMENT: WEEK 1 EXERCISES
CH. 2 EXERCISE 1
You manage a hotel resort located on the South Beach on the Island of Kauai in Hawaii. You are shifting the focus of your resort from a traditional fun-in-the-sun destination to eco-tourism. (Eco-tourism focuses on environmental awareness and education.) How would you classify the following projects in terms of compliance, strategic, and operational?
Convert the pool heating system from electrical to solar power.	(Select from dropdown)
Build a four-mile nature hiking trail.	(Select from dropdown)
Renovate the horse barn.	(Select from dropdown)
Launch a new promotional campaign with Hawaii Airlines.	(Select from dropdown)
Convert 12 adjacent acres into a wildlife preserve.	(Select from dropdown)
Update all the bathrooms in condos that are 10 years or older.	(Select from dropdown)
Change hotel brochures to reflect eco-tourism image.	(Select from dropdown)
Test and revise disaster response plan based on new requirements.	(Select from dropdown)
What do you think you now know that would be useful for managing projects at the hotel?
(Enter response)