i. Introduce wnCI How easy was it to classify these projects? What made some pro

Question

i. Introduce wnCI How easy was it to classify these projects? What made some projects more difficult than others? What do you think you now know that would be useful for managine projects at the hotel? 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 annual net cash flow of $40,000. The Beta project will cost $200,000 to develop and is expected to have annual net cash flow of $50,000. The company is very concerned about their cash flow. Using the payback period, which project is better from a cash flow standpoint? Why?

Explanation / Answer

In this specific condition

Payback = Investment /Annual Savings

Calculatin feasability for both of the projects.

Project Alpha = $150,000 / $40,000 = 3.75 Years

Project Beta = $200,000 / $50,000 = 4.0 Years

By looking at the results we can clearly see that project Alpha is better from a cash flow stand point as it provides better payback in less time.

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