Criteria Weight Project 1 Project 2 1 Market share effect 10% 50 30 2 Competitio
ID: 3736293 • Letter: C
Question
Criteria
Weight
Project 1
Project 2
1
Market share effect
10%
50
30
2
Competition
5%
70
70
3
Risk
10%
50
30
4
Product fit
5%
50
0
5
Strategic plan alignment
15%
70
30
6
Customer support
20%
30
30
7
Payback
10%
30
10
8
NPV
15%
30
30
9
ROI
10%
30
10
Total
100%
Calculate the weighted score for each project.
Identify which project is best to select? and why?
Q2) Given the following information about the project:
Discount Rate
8%
Years
Total
Year 0
Year 1
Year 2
Cost
100,000
80,000
90,000
Discount factor
1
0.93
0.86
Discounted Cost
Benefits
40,000
24,000
36,000
Discounted benefits
Answer the following questions:
Calculate NPV and ROI ?
NPV =
ROI =
In which year may pay back occur?
Criteria
Weight
Project 1
Project 2
1
Market share effect
10%
50
30
2
Competition
5%
70
70
3
Risk
10%
50
30
4
Product fit
5%
50
0
5
Strategic plan alignment
15%
70
30
6
Customer support
20%
30
30
7
Payback
10%
30
10
8
NPV
15%
30
30
9
ROI
10%
30
10
Total
100%
Explanation / Answer
Answer 1 :
Weighted score for project 1 = Sum(Weight*Score)
= (50*.10)+(70*.05)+(50*.10)+(50*.05)+(70*0.15)+(30*.20)+(30*.10)+(30*.15)+(30*.10)
= 5+3.5+5+2.5+10.5+6+3+4.5+3
= 43
Weighted score for project 2 = Sum(Weight*Score)
= (30*.10)+(70*.05)+(30*.10)+(0*.05)+(30*0.15)+(30*.20)+(10*.10)+(30*.15)+(10*.10)
= 3+3.5+3+0+4.5+6+1+4.5+1
= 26.5
On comparision, the Project 1 is better as it has the better weighted score for Market share effect, product fit, Strategic plan alignment. Also Payback and Return on Investment is better in project 1.
Thus project 1 is better.
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