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Tutorial 3 Question 3 (B) (I) Project A Project B

Project A has the highest total score of 53 and is therefore the best project for the IT department to implement. Project B should be selected over Projects A, C, and D as it has the highest total score of 71.5. The net present value of Project B is RM63,200 based on costs of RM50,000 per year for 5 years and benefits of RM130,000 per year for 5 years.

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46 views8 pages

Tutorial 3 Question 3 (B) (I) Project A Project B

Project A has the highest total score of 53 and is therefore the best project for the IT department to implement. Project B should be selected over Projects A, C, and D as it has the highest total score of 71.5. The net present value of Project B is RM63,200 based on costs of RM50,000 per year for 5 years and benefits of RM130,000 per year for 5 years.

Uploaded by

Chiam Zhiyen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Tutorial 3 Question 3 (b)(i)

Project A Project B
Criterion Weight Score Weighted Score Score Weighted Score
Market share effect 10% 70 7 50 5
Competition 5% 30 1.5 70 3.5
Risk 10% 10 1 50 5
Product Fit 5% 70 3.5 50 2.5
Strategic plan alignment 15% 50 7.5 70 10.5
Customer support 20% 50 10 30 6
Payback 10% 70 7 30 3
NPV 15% 70 10.5 30 4.5
ROI 10% 50 5 30 3
Total Score 53 43

Question 3 (b)(ii)

Answer: Project A is the best project that should be implemented by the IT department as it has the highest score a
ment as it has the highest score at 53.
Question 4(a)(i)
Project A Project B
Criteria Weight Score Weighted Score Score
Meets key business goals 30% 90 27 90
Strong customer support 15% 50 7.5 90
Uses realistic level of technology 10% 25 2.5 90
Able to implemented in less than a year 15% 20 3 20
Yield positive NPV 20% 50 10 70
Risk 10% 20 2 50
Total Score 52

Question 4(a)(ii)

Answer: Project B should be selected as it has the highest score at 71.5 compare to Project A, C and D.
Project B Project C Project D
Weighted Score Score Weighted Score Score Weighted Score
27 50 15 20 6
13.5 50 7.5 20 3
9 50 5 70 7
3 50 7.5 90 13.5
14 50 10 50 10
5 50 5 90 9
71.5 50 48.5

e to Project A, C and D.
Question 4(b)

Cash Flow PVF @10% Present value


Year Costs(RM) Benefits
(Benefits-Costs) 1/(1+i)^n cash flow

0 240,000 - - 240,000 1.000 - 240,000


1 50,000 130,000 80,000 0.909 72,720
2 50,000 130,000 80,000 0.826 66,080
3 50,000 130,000 80,000 0.751 60,080
4 50,000 130,000 80,000 0.683 54,640
5 50,000 130,000 80,000 0.621 49,680
NPV= RM63,200
Question 5(a)(i)

Year Costs (RM) Cumulative Costs Benefits (RM) Cumulative Benefits


0 80,000.00 80,000.00 20,000.00 20,000.00
1 48,000.00 128,000.00 26,000.00 46,000.00
2 28,800.00 156,800.00 33,800.00 79,800.00
3 17,280.00 174,080.00 43,940.00 123,740.00
4 10,368.00 184,448.00 57,122.00 180,862.00
5 6,220.80 190,668.80 74,258.60 255,120.60
6 3,732.48 194,401.28 96,536.18 351,656.78

Payback Period= 4+(184,448-180,862)/ (74,258.6-6,220.8)


= 4.05 years

Question 5(a)(ii)

Return on Investment(ROI)= (351,656.78-194,401.28) /194,401.28)*100%


= 80.89%
Question 5 (a)(iii)

PVF @10% Present value


Year Costs (RM) Benefits (RM) Cash Flow
1/(1+i)^n cash flow

- 80,000.00 20,000.00 - 60,000.00 1.000 -60000


1 48,000.00 26,000.00 - 22,000.00 0.909 -19998
2 28,800.00 33,800.00 5,000.00 0.826 4130
3 17,280.00 43,940.00 26,660.00 0.751 20021.66
4 10,368.00 57,122.00 46,754.00 0.683 31932.982
5 6,220.80 74,258.60 68,037.80 0.621 42251.4738
6 3,732.48 96,536.18 92,803.70 0.564 52385.26926
NPV= RM70,723.39

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