Decide whether the new addition project is a good project using the data below M

Question

Decide whether the new addition project is a good project using the data below Month 0 Month 1 Month 2 Month 3 Month 4 Benefits as Social Venue S- $1,500 $2,500 $3,000 $2,500 $1,500 $1,000 $900 $1,000 $1,000 $800 raig Construction: Home Improvement Project Benefits of Satisfaction $800 Benefits of Having Good Time $- $1,000 Cost of Project $14,000 $500 Cost of Furniture $1,000 $- Cost of Socialization $150 $200 $300 $200 4. What is the payback period of the new addition project? What is the ROl? . Design a scorecard for this project. What is the project score? 6. Write a project charter and a scope for this project

Explanation / Answer

4.

Payback period is the time when the project starts making profit.

As here the cumm profit becomes positive only in month 4.

Hence payback period is 4 months

And the ROI: is

Month 0 Month 1 Month 2 Month 3 Month 4 Benefits 1 0 1500 2500 3000 2500 2 0 1500 1000 900 800 3 0 1000 1000 800 1000 Total 0 4000 4500 4700 4300 Cumm Total 0 4000 8500 13200 17500 Cost 1 14000 500 0 0 0 2 0 1000 0 0 0 3 150 200 300 200 Total 14000 1650 200 300 200 Cumm Total 14000 15650 15850 16150 16350 Profit -14000 2350 4300 4400 4100 Cumm Profit -14000 -11650 -7350 -2950 1150 (Benefit/Cost) ROI 0 2.424242 22.5 15.66667 21.5 Total (Benefit/Cost) Cumm ROI 0 0.255591 0.536278 0.817337 1.070336

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