What should order of priority based on return on investment

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Reference no: EM132382375

Question 1. You are the head of the project selection team at SIMSOX. Your team is considering three different projects. Based on past history, SIMSOX expects at least a rate of return of 20 percent. Your financial advisors predict inflation to remain at 3 percent into the foreseeable future.

Given the following information for each project, which one should be SIMSOX first priority? Should SIMSOX fund any of the other projects? If so, what should be the order of priority based on return on investment?

Project: Dust Devils

Year	Revenue Stream	Investment	Net flow	Discount Factor	NPV
0		500,000
1	50,000
2	250,000
3	350,000
					Total:

Project: Ospry

Year	Revenue Stream	Investment	Net flow	Discount Factor	NPV
0		250,000
1	75,000
2	75,000
3	75,000
4	50,000
					Total:

Project: Voyagers

Year	Revenue Stream	Investment	Net flow	Discount Factor	NPV
0		75,000
1	15,000
2	25,000
3	50,000
4	50,000
5	150,000
					Total:

Question 2. The Custom Bike Company has set up a weighted scoring matrix for evaluation of potential projects. Below are five projects under consideration.

a. Using the scoring matrix below, which project would you rate highest? Lowest?

b. If the weight for "Strong Sponsor" is changed from 2.0 to 5.0, will the project selection change? What are the three highest weighted project scores with this new weight?

c. Why is it important that the weights mirror critical strategic factors?

Reference no: EM132382375

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