Scribd
Upload
401 views

Assignment 3 PM II

This document discusses project screening and selection models. It provides examples of using different models, such as a profile model and discounted payback, to evaluate project alternatives. For the profile model, the efficient frontier is defined as the combination of portfolios that maximize returns for a given risk. Projects B and E fall on the efficient frontier, while projects A, D, F, and C do not meet the company's risk and return requirements. Using discounted payback on a $50,000 investment that generates $30,000, $30,000, $40,000, $25,000, and $15,000 over five years, the project would pay back in 2.1 years. Leadership behaviors like understanding motivation,

Uploaded by

Praneeth Reddy
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
401 views

Assignment 3 PM II

This document discusses project screening and selection models. It provides examples of using different models, such as a profile model and discounted payback, to evaluate project alternatives. For the profile model, the efficient frontier is defined as the combination of portfolios that maximize returns for a given risk. Projects B and E fall on the efficient frontier, while projects A, D, F, and C do not meet the company's risk and return requirements. Using discounted payback on a $50,000 investment that generates $30,000, $30,000, $40,000, $25,000, and $15,000 over five years, the project would pay back in 2.1 years. Leadership behaviors like understanding motivation,

Uploaded by

Praneeth Reddy
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

1unning Head: IndM 4250

Assignment III
Vallapureddy Shashank Reddy
University of Central Missouri

R
2

IndM 4250 Project ManagementAssignment III


Discussion Questions:
1.If you were to prioritize the criteria for a successful screening model, which criteria would
you rank at the top of your priority list? Why?
My top priority goes to Ease of use because every project depends upon people need and
their demands. The models must be simply and should be easily understand by the people. This
model generates more information where people can understand easily and quickly.
2. What are the benefits and drawbacks of checklists as a method for screening project
alternatives?
Checklist method is one of simplest method for the screening project alternatives. Some
of the benefits of this methods are
a) These are used in making the trade off decision to determine a criteria.
b) It leads to better choices among the project alternatives
Some of the drawbacks are
a) Subjective nature of the rating process
b) Difficulty in assigning the meaning full values.
5. How are financial models superior to other screening models? How are they inferior?
Financial models are useful in selecting the decisions for the projects like cash flow
analysis , net present values etc. Most of the financial models are depend on time value money
principle. These models suggest about the future money from project investment. Financial
models have some drawback too, in this model the economic predictions for the future economic
growth may be invalid.
Problems:
6. Profile Model. Assume the project profile model shown in Figure 3.9. Define the efficient
frontier. The dotted lines represent the minimum return and the maximum risk that the
company will accept. Which projects would be suitable for retaining and which should be
dropped from the companys portfolio? Why?
Effective Frontier:
Its is defined as combination of security portfolios which helps the project to gain
maximum returns at any level of risks and also to helps to minimize risk for gaining expected
returns (Harvey, n.d.).
In my point of view, the efficient frontier line will be in between Project B and Project E.
Projects F and C in the portfolio may offer lower potential returns for similar levels of risk.
Projects A and D are outside the acceptable boundaries for risk or return.

R
3

8. Discounted Payback. Your company is seriously considering investing in a new project


opportunity, but cash flow is tight. Top management is concerned about how long it will
take for this new project to pay back the initial investment of $50,000. You have determined
that the project should generate inflows of $30,000, $30,000, $40,000, $25,000, and $15,000
for the next five years. Your firms required rate of return is 15%. How long will it take to
pay back the initial investment?
Below table explains about the time needed to pay back the initial investment of $50,000
Total Outflow = $ 75,000
Required Rate of Return = 10 %
Discount Factor = 1/(1+0.15)t
Year
0
1
2
3
4
5
Payback = 2.1 years

Cash Flow
($50,000)
30,000
30,000
40,000
25,000
15,000

Discount Factor
1.0
.87
.76
.66
.57
.50

New Inflows
($50,000)
26,100
22,800
26,400
14,250
7,500

It will take at least two year for pay back of initial investment.
Case Study Questions:
1. As the team leader, you have weighed the pros and cons of the five options and prepared
a presentation to management on how to address this problem. What do you suggest?
At the beginning stage this case is referred to five project alternatives . Understudies
might be asked to offer both positive and negative remarks on the circumstances and John's
conduct as an initial move to a more finish dissection of what the issues are and how best to
manage them. Next, understudies might be inquired as to whether there are option choices that
top administration has not considered and assuming this is the case, the profits and disadvantages
of each of these alternatives.
3. What specific leadership behaviors mentioned in this chapter are most relevant to
addressing and resolving the problems with John?
Several leadership behaviors come to mind, most based on the requirement for good
interpersonal abilities, an understanding of inspiration , the pioneer needs individual validity, the
capability to consider inventive results , and generally the pioneer must have the individual
respectability to be completely forthright and clear with John to exhibit an understanding of
John's conduct, a readiness to consider why it is happening, and the genuineness to reveal to him
that in the event that it proceeds with, it will require outcome.

R
4

References
Harvey, C.R. (n.d.). Efficient Frontier. Retrieved from http://financialdictionary.thefreedictionary.com/Efficient+Frontier
Pinto, J.K. (2007). Project Selection and Portfolio management. Project Management: Achieving
Competitive Advantage

You might also like