internal rate of return‚ and to decide which project will be the most beneficial project for the company to invest in‚ in hopes of having a successful ROI. The initial working capital shown in the cash flow chart for each project is $100‚000. Project A has an annual cash flow of $32‚000 but project B receives a lump sum in the 5th year of $200‚000. The ROI on the initial investment is 0.11. 12 a.) The payback period for Project A is 3.125 years ($100000/32000 = 3.125 year). Project B’s payback period
Premium Net present value Cash flow Rate of return
PHUKET BEACH HOTEL: VALUING MUTUALLY EXCLUSIVE PROJECTS I. STATEMENT OF THE PROBLEM This is an assessment of the different costs and benefits of two mutually exclusive capital projects involving the use of an underutilized space located on the second floor of the main building of Phuket Beach Hotel (PBH). The first project‚ Planet Karaoke Pub (PKP) offered to sign a four-year lease agreement with (PBH) while the second project‚ Beach Karaoke Pub (BKP)‚ is a pub the PBH itself‚ plans to put
Premium Net present value
Chapter 3: 2. What are some sources of risk in a systems analysis and design project‚ and how does a project manager cope with risk during the stages of project management? Many risks may arise in a systems analysis and design project and these risks can develop from the following sources: The use of new technology; with any technology that is unfamiliar‚ problems can occur that the project management and systems analysis team are not able to manage. This may lead to the use of additional
Premium Project management Net present value
in this chapter‚ develop a spreadsheet that summarizes this project’s cash flow‚ assuming a four-year useful life after the project is developed. Compute the present value of the cash flows‚ using an interest rate of 9%. What is the NPV for this project? What is the ROI for this project? What is the break-even point? Should this project be accepted by the approval committee? SOLUTION As the numbers indicate‚ this would not be an economically feasible project for a number of reasons. It would take
Premium Net present value Cash flow Rate of return
& CAPITAL ASSET PRICING MODEL | | |Every financial investment contains some | |To see how the risk matrix (see below) described in this tutorial is used‚ please | |level of financial risk. This risk is | |take a look at FinanceIsland’s ROI analysis tool. You can try it out |usually expressed through the discount rate | |by subscribing for a free trial. |used in the financial analysis. Since the | |
Premium Investment Risk Finance
Return on Investment (ROI) and Total Cost of Ownership: A Comparison Introduction When a business decision is made to make an investment‚ the need for metrics arises to decide the profitability of the investment. These metrics can be measured before an investment is made to gain an insight into expected returns or they can be measured at regular intervals‚ (quarterly or yearly) to analyse the profitability of the investment. There are quite a few metrics that are used to calculate profitability
Premium Rate of return Investment Net present value
1. Describe and evaluate Harley’s operations strategy (using the framework of Chapter 1) It is helpful to adopt three different yet complementary views of operations strategy: The resource view of operations comprises 4 key questions: • Sizing –Due to the volatility and cyclical motorcycle business‚ Harley-Davidson attempts to expand capacity without taking on further debt. Thus‚ it would expand capacity first through internal process improvements and restructuring‚ and externally only if needed
Premium Net present value Harley-Davidson Production line
( Design of a Small–Scale Biodiesel Production System Jeffrey Anderson‚ Jessica Caceres‚ Ali Khazaei‚ Jedidiah Shirey Abstract – The city of Fredericksburg is located in central Virginia and is home to 592 farms covering 16% of the total land area. Farms in this region have experienced declining profits from an average of $555 per farm in 1997 to -$14‚931 per farm in 2007. One of the ways to reduce operating costs and return to profitability is to significantly reduce diesel costs. An alternative
Premium Biodiesel Agriculture
and benefits of different financing alternatives and‚ finally‚ select the optimal financing package in terms of expense‚ expected return to investment and financial flexibility. Analytical approach Unlevered free cash flows to the firm ROI analysis NPV analysis Findings 1. The strengths and draws of debt financing Burns and Irvine can maintain 100% ownership of this company using debt financing. Their obligations are payment of principal and interests and they can run business without
Premium Net present value Free cash flow Cash flow
Where to from here?? Project Inception “Research and understand the problem” Project feasibility and Planning “Ensure it is worth doing” (more detail in the course text’s on-line Appendix) Additional Reference: Information Technology Project Management‚ any edition past 4th Edition Schwalbe‚ Kathy Thomson Course Technology IT Planning Process Identification of Potential Projects • Many organisations follow a planning process for selecting IT projects. • It’s crucial to align IT projects with
Premium Project management Net present value