Question
In: Operations Management
Two possible projects have beenidentified for potential selection (i.e., Project 1 or Project 2).These...
Two possible projects have been identified for potential selection (i.e., Project 1 or Project 2). These projects should be evaluated based on the following criteria: Strategic fit; Probability of technical success; Financial risk; Potential profit; Strategic leverage; and Recommendations. Using the weighted scoring model and the information provided below, determine which project you should pursue:
The weighted project score forProject 1 was calculated to be68.25 (you should check this value to verify that your method is correct).
Using the information, evaluate the following:
Weighted Score for Project 2 (to the “hundredth” decimal place). Please show your hand calculations forProject 2. NOTE: You may solve this problem manually. If you do, please show your calculations for Project 2 below. If you choose to use Excel, please upload your spreadsheet to Canvas.
Which project would you choose, and why?
Solutions
Expert Solution
Weighted Score for project 1 = (0.25*65 + 0.2*90 + 0.1*40 + 0.15*85 + 0.25*55 + 0.5*70)
= (16.25 + 18 + 4 + 12.75 + 13.75 + 3.5)
= 68.25
a. Weighted Score for project 2 = (0.25*90 + 0.2*65 + 0.1*80 + 0.15*55 + 0.25*75 + 0.5*80)
= (22.5 + 13 + 8 + 8.25 + 13.75 + 4)
= 69.5
b. I would choose project 2 because of the high weighted score for the same.
keosha answered 2 years agoRelated Solutions
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS PROJECT 1 PROJECT 2 YEAR CASHFLOW CASHFLOW...
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED
CASHFLOWS
PROJECT 1 PROJECT 2
YEAR CASHFLOW CASHFLOW
1 $95,000 $112,000
2 $150,000 $95,000
3 $10,000 $85,000
4 $12,000 $65,000
5 $45,000 $10,000
6 $198,000 $15,000
BOTH PROJECTS HAVE A COST OF $275,000. THE COST OF CAPITAL IS
11.5%.
A) Calculate the payback period for each project. State if
payback is acceptable for each project and state why.
B) Calculate the NPV for each project. State if NPV is
acceptable for each...
You have two potential investment projects, Project A and Project B. You can take one, but...
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1
2
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Project A Cash Flow
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$5,000
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Project B Cash Flow
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$5,000
$50,000
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Two energy saving project have been identified by Company ABC.
These potential projects are known as project
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Financial item
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OPTION B (million)
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Economic life in years
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Salvage value
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Increase in annual operating costs from year and
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Suppose there are two potential projects for investment. Project 1 has a certain payoff of $50...
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(1)Which project will shareholders prefer? Justify your
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(2)Which project will debt holders prefer? Justify your
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(3)Which project will the financial manager prefer? Justify your
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2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED
CASHFLOWS
PROJECT
1
PROJECT 2
YEAR
CASHFLOW
CASHFLOW
1
$95,000
$112,000
2
$150,000
$95,000
3
$1,000
$85,000
4
$12,000
$65,000
5
$45,000
$10,000
6
$198,000
$15,000
BOTH PROJECTS HAVE A COST OF $300,000. THE COST OF CAPITAL IS
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A. CALCULATE THE PAYBACK FOR EACH PROJECT. STATE IF THE PROJECT
IS ACCEPTABLE UNDER PAYBACK AND WHY.
B. CALCULATE THE NPV FOR EACH PROJECT. STATE IF...
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED
CASHFLOWS
PROJECT
1
PROJECT 2
YEAR
CASHFLOW
CASHFLOW
1
$95,000
$112,000
2
$150,000
$95,000
3
$1,000
$85,000
4
$12,000
$65,000
5
$45,000
$10,000
6
$198,000
$15,000
BOTH PROJECTS HAVE A COST OF $300,000. THE COST OF CAPITAL IS
9.5%
A. CALCULATE THE PAYBACK FOR EACH PROJECT. STATE IF THE PROJECT
IS ACCEPTABLE UNDER PAYBACK AND WHY.
B. CALCULATE THE NPV FOR EACH PROJECT. STATE IF...
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED
CASHFLOWS
PROJECT
1
PROJECT 2
YEAR
CASHFLOW
CASHFLOW
1
$95,000
$112,000
2
$150,000
$95,000
3
$1,000
$85,000
4
$12,000
$65,000
5
$45,000
$10,000
6
$198,000
$15,000
BOTH PROJECTS HAVE A COST OF $300,000. THE COST OF CAPITAL IS
9.5%
A. CALCULATE THE PAYBACK FOR EACH PROJECT. STATE IF THE PROJECT
IS ACCEPTABLE UNDER PAYBACK AND WHY.
B....
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS
2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED
CASHFLOWS
PROJECT
1 PROJECT
2
YEAR CASHFLOW CASHFLOW
1 $95,000 $112,000
2 $150,000 $95,000
3 $10,000 $85,000
4 $12,000 $65,000
5 $45,000 $10,000
6 $198,000 $
15,000
BOTH PROJECTS HAVE A COST OF $275,000. THE COST OF CAPITAL IS
11.5%
A. Calculate the payback period for each
project. State if payback is acceptable for each project
and state why.
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project. State if NPV is acceptable for each project and
state why.
C. Calculate the IRR for each
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Project 2
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$40,000
Net revenue in 2021
$25,000
$35,000
Net revenue in 2022
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$45,000
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