Question

Calculate the Net Present Value of a project, which requires an initial investment of $399000 and it is expected to generate a cash inflow of $29000 each month for 12 months. Assume that the salvage value of the project is zero. The target rate of return is 11% per annum. Write the formula and calculate NPV. Justify the result.

Q4. (a) Mr. Yasser Al Harthi, has a Dell Laptop. His laptop has some problems in the motherboard unit, so it was not working properly. As it is the examination period, he wants to repair/replace the motherboard unit of the laptop. Mr. Yasser Al Harthi is taking the laptop to the service center, telling the service center manager (Mr. Bob) about the laptop problems, and asking him to check and repair/replace the motherboard unit. Service center manager asked the technician (Ms. Yusra al Balushi) to check the motherboard unit problems, do the repairing work, and change the necessary parts. The technician checked the laptop motherboard unit and found some problems then she decided to change some parts. The technician consulted the laptop parts supplier (Mr. Daniel), asked about the suitable motherboard unit parts, and bought from the supplier. Then the technician fixed the problems in the laptop and motherboard started working properly. Now Mr. Bob, the service center manager informed the laptop owner that the motherboard unit is repaired and he can come and take the laptop. Kindly write all the stakeholders in this laptop motherboard repairing activity scenario and their roles in the below given chart to make the complete RACI chart. Activity / Stakeholders Repairing & replacing the parts in laptop motherboard unit

(b) Design a requirement traceability matrix and give your own example of tracing any one requirement in the software project development.

Answer 1

Caluculating NPV of the project

NPV= Present value of the future cash inflows - present investment in the project

To calculate the present value of the future cash inflows, we have to dicount them @11% per ammum that is 0.9167% per month as cash inflows are monthly.

The calcualtion is as follows:

Month	cashflow	present value of the cash inflows
1	29000	29000/ (1.09167)^1	26564.8
2	29000	29000/ (1.09167)^2	24334.1
3	29000	29000/ (1.09167)^3	22290.71
4	29000	29000/ (1.09167)^4	20418.91
5	29000	29000/ (1.09167)^5	18704.29
6	29000	29000/ (1.09167)^6	17133.64
7	29000	29000/ (1.09167)^7	15694.89
8	29000	29000/ (1.09167)^8	14376.96
9	29000	29000/ (1.09167)^9	13169.69
10	29000	29000/ (1.09167)^10	12063.8
11	29000	29000/ (1.09167)^11	11050.78
12	29000	29000/ (1.09167)^12	10122.82
		total present value of the cash flow	205925.4

therefore, NPV is 205925.4- 399000= -193075.6

Negative NPV indicates that this prject is not profitable to invest in.