Project Selection and Estimation [4 points] Project Selection: Use a weighted sc
ID: 465351 • Letter: P
Question
Project Selection and Estimation
[4 points] Project Selection: Use a weighted scoring model to choose between two projects: A and B. The relative weights for each criterion and the assessment of each project for these criteria are shown in the following table. Which project would you choose?
(Assume 10 represents the preferred score and 1 represent the undesired score.)
Weights
Project A
Project B
Strategic fit
30
10
8
Increase profitability
20
5
7
Urgency
10
6
3
Improves the customer service
20
4
7
Increase productivity
10
1
7
Reduce head counts
10
5
8
[6 points] NPV: Consider the following Net Present Value analysis. Assume your irresponsible intern mistakenly deleted several cells in your Excel file? (It seems like your intern is from UCLA). You now need to calculate these missing numbers again. Assume the discount rate is 15%.
Each missing number is highlighted and denoted for a letter in the table. Write your answer for each grey box below:
[1 point] A =
[1 point] B =
[1 point] C =
[1 point] D =
[1 point] E =
[1 point] Would you choose this project? (Circle One) Yes No
question 3
Weights
Project A
Project B
Strategic fit
30
10
8
Increase profitability
20
5
7
Urgency
10
6
3
Improves the customer service
20
4
7
Increase productivity
10
1
7
Reduce head counts
10
5
8
Explanation / Answer
Project A over all weight = (0.3*10)+(0.2*5)+(0.1*6)+(0.2*4)+(0.1*1)+(0.1*5)= 6
Project B over all weight = (0.3*8)+(0.2*7)+(0.1*3)+(0.2*7)+(0.1*7)+(0.1*8)= 7
Based on the weighted rating project B to be taken up as it results in higher weighted score.
A = 90000+15000= 115000
B= 120000-15000= 105000
C = 0.85/(1.15)= 0.74
D = 0.62/(1.15) = 0.54
E = 63017
Since NPV is negetive i will not opt for project.
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