Question 1

Cost of new truck = $56 100

Cost savings = $ 8 200

Salvage value = $28 500

Cost of capital = 8%

Cash payback period

Annual depreciation = (56100-28500) / 8 = $3,262.50

Annual cash savings = $8,200 - $3,262.50 = $4,937.50

Payback period = Initial investment / Annual cash savings

Payback period = $56,100 / $4,937.50 = 11.37 years

Net present value= $28,500/1.088 + 4,937.50/1.08

=$15,397.66+4,571.76

=10,825.90

Question 2

Discounted Payback Periods of each project at 5% discount rate:

Project one

Present Value of cash flow year one = $ 4000/1.05 = $3,809.52

Present Value of cash flow year two = $4000/1.05^2 = $3,628.12

Present Value of cash flow year three = $4000/1.05^3 = $3,455.35

Present Value of cash flow year four = $4000/1.05^4 = $3,290.81

Discounted Payback Period = -$10,000 + $ 3,809.52 + $3,628.12 + $3,455.35 + $3,290.81 = $4,183.80

Project Two

Present Value of cash flow year one = $ 2000/1.05 = $1,904.76

Present Value of cash flow year two =$8000/1.05^2 = $7,256.23

Present Value of cash flow year three=$14000/1.05^3 = $12,093.73

Present Value of cash flow year four $20000/1.05^4 = $16,454.05

Discounted Payback Period = -$25,000+ $1,904.76 +$7,256.23+$12,093.73+$16,454.05

= $12,708.77

Project Three

Present Value of cash flow year one = $ 10000/1.05 = $9,523.80

Present Value of cash flow year two =$15000/1.05^2 = $13,605.44

Present Value of cash flow year three = $20000/1.05 ^3 = $17,276.75

Present Value of cash flow year four = $20000/1.05^4 = $16,454.05

Discounted Payback Period = -$45,000+ $9,523.80 +$13,605.44+$17,276.75+$16,454.05

= $11,860.05

Project Four

Present Value of cash flow year one = $ 40000/1.05=$38.095.24

Present Value of cash flow year two =$30000/1.05^2=$27,210.88

Present Value of cash flow year three =$20000/1.05^3=$17,276.75

Present Value of cash flow year four =$10000/1.05^4= $8,227.02

Discounted Payback Period = -$100,000 + $38.095.24 + $27,210.88 + $17,276.75 + $8,227.02 = -

$9190.10

Discounted Payback Periods of each project at 10% discount

rate:

Project one

Present Value of cash flow year one = $ 4000/1.10 = $3,636.36

Present Value of cash flow year two =$4000/1.10^2 = $3,305.78

Present Value of cash flow year three=$4000/1.10^3 = $3,005.26

Present Value of cash flow year four = $4000/1.10^4 = $2,732.05

Discounted Payback Period = -$10,000 + $3,636.36 + $3,305.78 + $3,005.26 + $2,732.05 = $2,679.45

Project Two

Present Value of cash flow year one = $ 2000/1.10 = $1,818.18

Present Value of cash flow year two = $8000/1.10^2 = $6,611.57

Present Value of cash flow year three = $14000/1.10^3 = $10,518.40

Present Value of cash flow year four $20000/1.10^4 = $13,660.27

Discounted Payback Period = -$25,000+ $1,818.18 +$6,611.57+$10,518.40+$13,660.27

= $7,608.42

Project Three

Present Value of cash flow year one = $ 10000/1.10 = $9,090.90

Present Value of cash flow year two = $15000/1.10^2= $12,396.70

Present Value of cash flow year three =$20000/1.10^3 =$15,026.30

Present Value of cash flow year four =$20000/1.10^4 = $13,660.27

Discounted Payback Period = -$45,000+ $9,090.90 +$12,396.70+ $15,026.30+$13,660.27

= $5,174.17

Project Four

Present Value of cash flow year one = $ 40000/1.10-$36,363.64

Present Value of cash flow year two = $30000/1.10^2=$24,793.39

Present Value of cash flow year three =$20000/1.10^3 =$15,026.30

Present Value of cash flow year four =$10000/1.10^4= $6,830.13

Discounted Payback Period =$100,000+ $36,363.64+$24,793.39+$15,026.30+$6,830.13 =$183,013.50

Discounted Payback Periods of each project at 20% discount rate:

Project one

Present Value of cash flow year one = $ 4000/1.20=$3,333.33

Present Value of cash flow year two =$4000/1.20^2=$2,777.78

Present Value of cash flow year three=$4000/1.20^3=$2,314.81

Present Value of cash flow year four -$4000/1.20^4=$1,929.01

Discounted Payback Period = -$10,000+ $3,333.33+$2,777.78+$2,314.81+$1,929.01 = $354.94

Project Two

Present Value of cash flow year one = $ 2000/1.20=$1,666.67

Present Value of cash flow year two =$8000/1.20^2=$5,555.56

Present Value of cash flow year three=$14000/1.20^3= $8,101.86

Present Value of cash flow year four = $20000/1.20^4= $9,645.06

Discounted Payback Period = -$25,000 + $1,666.67 +$5,555.56+$8,101.86+$9,645.06

= -$30.86

Project Three

Present Value of cash flow year one = $ 10000/1.20 = $8,333.33

Present Value of cash flow year two =$15000/1.20^2= $10,416.67

Present Value of cash flow year three =$20000/1.20^3 = $11,574.10

Present Value of cash flow year four =$20000/1.20^4 = $9,645.10

Discounted Payback Period = -$45,000+ $8,333.33 +$10,416.67+ $11,574.10+$9,645.10

= $5,030.86

Project Four

Present Value of cash flow year one = $40000/1.20 = $33,333.33

Present Value of cash flow year two = $30000/1.20^2 = $20,833.33

Present Value of cash flow year three = $20000/1.20^3 = $11,574.07

Present Value of cash flow year four = $10000/1.20^4 = $4,822.53

Discounted Payback Period = -$100,000+$33,333.33+$20,833.33+$11,574.07+$4,822.53 =-

$29,436.73

As the discount rate rises, the payback period increases as it exceeds the stated number of years.

QUESTON 3

A C
B G E

D G

F I

J
QUESTION 5

A C

B G

D F I

J
QUESTION 4

A C F J

A J

A B D G J

H I

E
QUESTION 6

A D

C F

G I

I
V V

QUESTION 7
V A V E G
V V

B G

D F H
V V V V
I

V
QUESTION 8

@ 8% discount rate

Project R

Present Value of cash flow year one = $ 6000/1.08 = $5555.56

Present Value of cash flow year two = $8000/1.08^2 = $6858.70

Present Value of cash flow year three = $10000/1.08^3 = $7938.32

Present Value of cash flow year four = $12000/1.08^4 = $8820.36

Discounted Payback Period = -$24,000 + $5555.56 + $6858.70 + $7938.32 + $8820.36 = $5172.94

Project S

Present Value of cash flow year one = $ 9000/1.08 = $8333.33

Present Value of cash flow year two =$6000/1.08^2 = $5144.03

Present Value of cash flow year three=$6000/1.08^3 = $4763

Present Value of cash flow year four $3000/1.08^4 = $2205.09

Discounted Payback Period = -$18,000+ $8333.33 + $5144.03 + $4763 + $2205.09

= $2445.45

@12 % discount rate

Project R

Present Value of cash flow year one = $ 6000/2.20 = $2727.27

Present Value of cash flow year two =$8000/2.20^2 = $1652.89

Present Value of cash flow year three=$10000/2.20^3 = $939.14

Present Value of cash flow year four = $12000/2.20^4 = $512.26

Discounted Payback Period = -$24,000 + $2727.27 + $1652.89 + $939.14+ $512.26= -$18168.44

Project S

Present Value of cash flow year one = $ 9000/2.20 = $4090.90

Present Value of cash flow year two = $6000/2.20^2 = $1239.67

Present Value of cash flow year three = $6000/2.20^3 = $563.49

Present Value of cash flow year four $3000/2.20^4 = $128.07

Discounted Payback Period = -$18,000+ $4090.90 + $1239.67 + $563.49 + $128.07

= -$11977.87

@16% discount rate:

Project R

Present Value of cash flow year one = $ 6000/2.6= $2307.69

Present Value of cash flow year two =$8000/2.6^2= $1183.43

Present Value of cash flow year three=$10000/2.6^3= $568.96

Present Value of cash flow year four =$12000/2.6^4= $262.60

Discounted Payback Period = -$24,000+ $2307.69 + $1183.43 + $568.96 + $262.60 = -$19677.32

Project S

Present Value of cash flow year one = $ 9000/2.6= $3461.54

Present Value of cash flow year two =$6000/2.6^2= $887.57

Present Value of cash flow year three=$6000/2.6^3= $341.37

Present Value of cash flow year four = $3000/2.6^4= $65.64

Discounted Payback Period = -$18,000 + $3461.54 + $887.57 + $341.37 + $65.64

= -$13243.88

Question 9

The payback period is easy and straightforward to calculate, however, it fails to consider the time value of
money and disregards cash flow received after the payback period. That's why the method is best used for
smaller investments and projects.

Cash Payback Period

Project A;

Investment- $25,000
Annual cost = $5,000

6 years

Cash Payback Period 25000/5000

=5 years

Project B

Investment = $8,000

Annual cost $4,000

2 years

Payback period- 8,000/4,000

= 2 years

The project which has a better payback period is that of Project B

QUESTION 10

Cash payback period = Initial investment/Annual cash inflow

= 450,000/60,000

= 7.5years

QUESTION 11

Initial investment =$50million

year Cash inflow Cumulative cash inflow

1 $10million $10million

2 $13million $23million

3 $16million $39million

4 $19million $58million

5 $22million $80million
Unrecovered investment at the start of year 4;

Initial cost – cumulative cash inflow at the end of year 3

=$50million – $39million

=$11million

Payback period= 3 + (11million/19million)

=3 + 0.579

=3.579 years

Question 13

Unfreeze, Change, Refreeze or is a model to understand and manage organizational change. It aims to
understand why change occurs, implement the necessary changes and normalize them in the
organization's day-to-day operations. The ultimate goal is to change the status quo with minimal effect on
processes or employees, while ensuring maximum ROI.

The first unfreezing stage is primarily aimed at creating awareness about the upcoming change. In the
change stage, the actual implementation happens to support the transition. In the final refreeze stage, the
goal is to achieve stability and equilibrium after the change.

Change. After the proposed transformation is properly communicated, the next stage is to implement the
change as quickly and as seamlessly as possible. In the change stage, the actual changes to the company's
organizational structure, business practices, staffing or other areas are implemented. These changes may
vary in degree, depending on the company's needs, but they should always be carefully determined with
input from employees and other key stakeholders.

Refreeze. The final stage is about solidifying the change, so that the modifications made in the second
stage are normalized or internalized in the organization's daily activities. This process can be slow
because it can take a long time for employees to get used to new practices or procedures.

14. A project lifecycle involves;

1. Project Initiation Phase

This is the start of the project for the project manager, who is responsible for defining the project at a high
level. This usually begins with a business case, feasibility study, cost-benefit analysis and other types of
research to determine whether the project is feasible and should or shouldn't be undertaken. Stakeholders
provide input. If the project is approved, then a project charter is created, which provides an overview of
the project and sets up the stage for your project plan.

2. Project Planning Phase

This is where the project plan is created, and all involved in the project will follow it. This phase begins
by setting SMART (specific, measurable, attainable, realistic, timely) goals. The scope of the project is
defined and a project management plan is created, identifying cost, quality, resources and a timetable.
Some of the features of this phase include a scope statement, setting of milestones, communication, risk
management plans and a work breakdown structure.

3. Project Executing Phase

Now begins the part of the project that most people think of as the project: executing the tasks,
deliverables and milestones defined in the project scope. Some tasks that make up this phase include
developing the team and assigning resources using key performance indicators, executing the project
plan, procurement management and tracking and monitoring progress. If needed, you can set status
meetings and revise the schedule and plan.

4. Project Monitoring and Controlling Phase

The project monitoring and controlling phase consists of setting up controls and key performance metrics
to measure the effectiveness of the project execution. The monitoring and controlling project phase is
very important to make sure the execution goes as planned in terms of schedule, scope and budget
baselines.

5. Project Closing Phase

It's not over until the project closure phase it's over. Completing the deliverables to the satisfaction of
your stakeholders is key, of course, but the project manager must now disassemble the apparatus created
to fulfill the project. That means closing out work with contractors, making sure everyone has been paid
and ensuring that all project documents are signed off on and archived to help with planning future
projects.

15. The system development life cycle of SDLC is a project management model used to outline, design,
develop, test, and deploy an information system or software product. In other words, it defines the
necessary steps needed to take a project from the idea or concept stage to the actual deployment and
further maintenance

Question 13

Change management by Kurt Lewins

This model is often represented by three stages: Unfreeze, Change, and Refreeze. Each stage is crucial for
successfully implementing organizational change. It aims to understand why change occurs, implement
the necessary changes and normalize them in the organization's day-to-day operations. The ultimate goal
is to change the status quo with minimal effect on processes or employees, while ensuring maximum
ROI.

Unfreezing stage is primarily on creating awareness of the need for change and building a sense of
urgency among stakeholders.. In the change stage, the actual implementation happens to support the
transition. In the final refreeze stage, the goal is to achieve stability and equilibrium after the change.
Change stage is after the proposed transformation is properly communicated, the next stage is to
implement the change as quickly and as seamlessly as possible. In the change stage, the actual changes to
the company's organizational structure, business practices, staffing or other areas are implemented. These
changes may vary in degree, depending on the company's needs, but they should always be carefully
determined with input from employees and other key stakeholders.

Refreeze stage is he final stage is about solidifying the change, so that the modifications made in the
second stage are normalized or internalized in the organization's daily activities. This process can be slow
because it can take a long time for employees to get used to new practices or procedures.

Question 14

A project lifecycle involves

1. Initiation Phase

The initiation stage marks the beginning of the project lifecycle. During this phase, the project is
conceptualized, and its feasibility is assessed. Key activities include defining the project scope,
objectives, stakeholders, and high-level requirements. The initiation phase concludes with the creation of
a project charter or initiation document, which formally authorizes the project and assigns a project
manager.

2. Planning Phase

The planning stage involves detailed planning and preparation to guide the project's execution. Activities
include developing a project management plan, defining deliverables, creating a work breakdown
structure (WBS), estimating resources, developing schedules, and identifying risks. Stakeholder
engagement and communication planning are also critical components of the planning phase. The output
of this phase is a comprehensive project plan that serves as a roadmap for executing and monitoring the
project.

3. Executing Phase

The execution stage is where the project work is performed according to the project plan. Activities
include coordinating resources, managing stakeholder expectations, implementing quality assurance
processes, and monitoring project progress. The project team carries out the tasks defined in the project
plan, and deliverables are produced and validated against predefined criteria. Effective communication,
teamwork, and risk management are essential during the execution phase to ensure that the project stays
on track and meets its objectives.

4. Monitoring and Controlling Phase

The project monitoring and controlling phase consists of setting up controls and key performance metrics
to measure the effectiveness of the project execution. The monitoring and controlling project phase is
very important to make sure the execution goes as planned in terms of schedule, scope and budget
baselines.

5. Closing Phase
The closure stage marks the formal conclusion of the project and involves wrapping up project activities
and delivering the final product, service, or result to the customer or stakeholders. Activities include
conducting post-project reviews, documenting lessons learned, obtaining formal acceptance of
deliverables, and transitioning resources. Administrative tasks such as archiving project documentation,
releasing project resources, and closing out contracts are also completed during this phase. The closure
phase provides an opportunity to celebrate project success, recognize team contributions, and identify
opportunities for improvement in future projects.

Question 15

Project System Development Lifecycle

The system development life cycle of SDLC is a project management model used to outline, design,
develop, test, and deploy an information system or software product. In other words, it defines the
necessary steps needed to take a project from the idea or concept stage to the actual deployment and
further maintenance.

Initiation:

The initiation stage marks the beginning of the SDLC and involves identifying the need for a new system
or an enhancement to an existing system. Key activities include conducting feasibility studies, defining
project objectives, and establishing the business case for the project.

Planning:

The planning stage focuses on defining the project scope, objectives, deliverables, resources, timelines,
and budget. Key activities include creating a project management plan, developing a work breakdown
structure (WBS), estimating resources and costs, and defining the project schedule.

Analysis:

The analysis stage involves gathering, documenting, and analyzing user requirements to understand the
needs of stakeholders and define system functionalities. Requirements analysis techniques such as
interviews, surveys, workshops, and prototyping may be used to elicit and prioritize requirements.

Design:

The design stage focuses on translating the requirements specification into a detailed system design that
specifies the system architecture, components, interfaces, and data structures. This stage includes
designing the user interface, database schema, software components/modules, and integration
mechanisms.

Implementation:

The implementation stage involves building, coding, and testing the system components according to the
design specifications. Developers write code, configure software, and integrate system components to
create the working system. Unit testing, integration testing, and system testing are performed to verify
that the system functions as intended and meets the specified requirements.

Deployment:

The deployment stage involves installing the completed system in the production environment and
making it available to end-users. Activities include data migration, system configuration, user training,
and documentation preparation. Deployment may be conducted in phases or all at once, depending on the
project requirements and risk factors.

Operations and Maintenance:

The operations and maintenance stage involves supporting, maintaining, and enhancing the system
throughout its lifecycle. Activities include monitoring system performance, resolving issues and bugs,
applying updates and patches, and implementing changes in response to user feedback or evolving
requirements. Continuous improvement processes such as root cause analysis, lessons learned, and
feedback mechanisms are used to optimize system performance and reliability.

Retirement:

The retirement stage marks the end of the system's lifecycle and involves decommissioning the system
and archiving relevant documentation and data. Activities include data cleanup, disposal of hardware and
software assets, and transitioning users to alternative systems or solutions. Post-implementation reviews
and evaluations are conducted to assess the system's performance, lessons learned, and opportunities for
future improvement

Question 16

1. Waterfall Model:

The waterfall model is a linear and sequential approach to software development. It consists of distinct
phases such as requirements gathering, design, implementation, testing, deployment, and maintenance.
Progress flows downwards through these phases, and each phase must be completed before moving on to
the next. It is well-suited for projects with clearly defined requirements and stable environments.

2. Agile Model:

Agile methodologies emphasize flexibility, iterative development, and customer collaboration. Agile
development is characterized by short development cycles called "sprints," typically lasting 2-4 weeks. It
prioritizes delivering working software frequently and involves continuous feedback and adaptation.
Popular agile frameworks include Scrum, Kanban, and Extreme Programming (XP).

3. Iterative Model:

The iterative model involves breaking down the software development process into smaller cycles or
iterations. Each iteration goes through the phases of requirements, design, implementation, testing, and
deployment. After each iteration, feedback is collected, and the software is refined and improved in
subsequent iterations. It allows for flexibility and evolution of requirements over time.
4. Spiral Model:

The spiral model combines elements of both waterfall and iterative models. It incorporates risk
management by continuously evaluating and mitigating risks throughout the development process. It
involves iterative cycles where each iteration progresses through planning, risk analysis, engineering, and
evaluation. It is particularly suitable for large and complex projects where risks need to be managed
effectively.

5. V-Model (Verification and Validation Model):

The V-Model is an extension of the waterfall model that emphasizes testing and validation. It aligns
testing activities with each phase of the development lifecycle, creating a corresponding "V" shape. Each
phase of development has a corresponding phase of testing, ensuring that requirements are validated at
every step. It ensures early detection and correction of defects, leading to higher software quality.

6. DevOps Model:

DevOps is a cultural and organizational approach that aims to integrate development and operations
teams to improve collaboration and productivity. It emphasizes automation, continuous integration,
continuous delivery (CI/CD), and monitoring throughout the software development lifecycle. DevOps
accelerates the pace of software delivery while maintaining high quality and reliability.

Question 17

Process of risk management

1. Risk Identification:

This stage involves identifying potential risks that could affect the project. Risks can come from various
sources, including technical challenges, resource constraints, stakeholder expectations, market changes,
and external dependencies. Techniques such as brainstorming, checklists, SWOT analysis (Strengths,
Weaknesses, Opportunities, Threats), and historical data analysis can be used to identify risks
comprehensively. Risks should be categorized based on their nature, such as technical risks,
organizational risks, environmental risks, etc.

2. Risk Assessment:

Once risks are identified, they need to be assessed in terms of their likelihood of occurring and their
potential impact on the project objectives. Qualitative assessment involves assigning subjective ratings
(e.g., low, medium, high) to risks based on expert judgment or predefined criteria. Quantitative
assessment involves assigning numerical values to risks based on statistical analysis or simulation
techniques. Risk assessment helps prioritize risks based on their severity, allowing resources to be
allocated efficiently for mitigation efforts.

3. Risk Analysis:
In this stage, a deeper analysis is conducted to understand the root causes and consequences of identified
risks. Risk analysis techniques such as root cause analysis, fault tree analysis, and failure mode and
effects analysis (FMEA) are used to investigate the factors contributing to risk occurrence and their
potential impacts. The goal is to gain insights into the nature of risks and develop effective strategies for
managing them.

4. Risk Response Planning:

Based on the findings of risk assessment and analysis, risk response strategies are developed to address
identified risks.

Common risk response strategies include:

Avoidance: Eliminating the risk by changing project scope, technology, or approach.

Mitigation: Reducing the probability or impact of the risk through proactive measures.

Transfer: Shifting the risk to third parties, such as insurance or outsourcing.

Acceptance: Acknowledging the risk without taking any specific action, either because the risk is deemed
acceptable or because mitigation is not feasible or cost-effective.

Each risk should have a clearly defined response strategy, with responsibilities assigned to specific team
members for implementation.

5. Risk Monitoring and Control:

Risk management is an ongoing process that requires continuous monitoring and control throughout the
project lifecycle. Progress against risk response plans should be tracked regularly to ensure that mitigation
efforts are effective and risks are managed proactively. New risks may emerge or existing risks may
evolve, requiring adjustments to the risk management approach. Communication and reporting
mechanisms should be established to keep stakeholders informed about the status of risks and the
effectiveness of risk mitigation efforts.

Question 18

1. Development Costs:

Development costs refer to the expenses incurred during the creation of the software product or system.
These costs include: Salaries and wages of development team members, including programmers,
designers, testers, and project managers.

2. Operating Costs:

Operating costs encompass the ongoing expenses associated with maintaining and supporting the
software product after it is developed and deployed. These costs may include maintenance and support
expenses, including bug fixes, updates, patches, and enhancements.

3. Revenue or Benefits:
Economic feasibility analysis also considers the potential revenue or benefits that the software product is
expected to generate over its lifetime. These may include direct revenue streams, such as sales revenue
from selling the software product or subscription fees for access to services.

Question 19

1. Configuration Identification:

Configuration identification involves identifying and defining the components of the software product
that need to be managed and controlled. This includes identifying all software artifacts, such as source
code files, documentation, libraries, configurations, and dependencies. Each configuration item (CI) is
uniquely identified and labeled to facilitate tracking and versioning. Configuration baselines are
established to capture the state of the software at specific points in time, serving as reference points for
change control and auditing.

2. Change Control:

Change control involves managing changes to the software product in a controlled and systematic
manner. It includes processes for submitting change requests, evaluating their impact, and implementing
approved changes. Change requests are typically documented and reviewed by a designated change
control board (CCB) or change advisory board (CAB) to assess their feasibility, risks, and implications.

3. Configuration Status Accounting:

Configuration status accounting involves capturing and recording the current state and history of all
configuration items throughout the software development lifecycle. It includes maintaining accurate and
up-to-date records of changes, versions, baselines, and relationships between configuration items.
Configuration management databases (CMDBs) or repositories store metadata about configuration items,
including their attributes, relationships, and version histories.

4. Configuration Auditing:

Configuration auditing involves conducting periodic reviews and assessments to ensure compliance with
configuration management policies, procedures, and standards. Audits may be conducted internally by the
project team or externally by independent auditors or stakeholders. Auditing activities include verifying
the completeness, correctness, and consistency of configuration items, baselines, and documentation

Question 20

1. Quality Objectives:

Quality objectives define the overall quality goals and targets that the project aims to achieve. These
objectives should be specific, measurable, achievable, relevant, and time-bound (SMART). Examples of
quality objectives may include meeting customer requirements, adhering to industry standards, achieving
a certain level of product reliability or performance, or reducing defects and rework.

2. Quality Assurance Processes:

Quality assurance processes outline the activities and procedures that will be implemented to ensure that
quality standards are met throughout the project lifecycle. This may include establishing quality
checkpoints, conducting reviews and inspections, performing quality audits, and enforcing quality
standards and best practices. Quality assurance processes help identify and prevent defects early in the
development process, reducing the likelihood of costly rework or customer dissatisfaction.

3. Quality Control Measures:

Quality control measures specify the techniques and tools that will be used to monitor and evaluate the
quality of the deliverables produced during the project. This may include testing methodologies, such as
unit testing, integration testing, system testing, and acceptance testing, as well as tools for defect tracking
and resolution. Quality control measures help identify deviations from quality standards and facilitate
corrective actions to address them promptly.

4. Roles and Responsibilities:

Roles and responsibilities define the individuals or teams responsible for implementing quality
management activities and ensuring that quality objectives are met. This includes roles such as quality
managers, quality assurance engineers, testers, project managers, and stakeholders. Clear allocation of
roles and responsibilities helps ensure accountability and effective coordination of quality-related
activities.

5. Quality Metrics and Reporting:

Quality metrics are quantitative measures used to assess the performance and effectiveness of the quality
management processes. Examples of quality metrics may include defect density, test coverage, customer
satisfaction scores, and on-time delivery rates. Regular reporting on quality metrics provides visibility
into the project's quality status, identifies areas for improvement, and facilitates data-driven decision-
making.

Question 21

1. Direct Changeover (Cold Turkey or Big Bang Changeover):

Direct changeover involves immediately replacing the old system with the new one at a specific point in
time. The transition occurs abruptly, often over a weekend or during a scheduled downtime period,
minimizing overlap between the old and new systems. All users switch to the new system simultaneously,
and the old system is decommissioned. Direct changeover is typically the fastest and simplest approach,
requiring minimal resources and planning. However, it also carries higher risks, as any issues or failures
in the new system can disrupt operations significantly. Organizations may choose direct changeover when
the old system is no longer viable, and there is a pressing need to implement the new system quickly.

2. Parallel Operation (Parallel Changeover or Parallel Conversion):

Parallel operation involves running both the old and new systems concurrently for a period of time.
During the parallel phase, users perform tasks and transactions on both systems simultaneously, allowing
for comparison and validation of results. This approach provides a safety net, as any discrepancies or
errors in the new system can be identified and addressed without impacting day-to-day operations. Once
the new system is deemed stable and reliable, the old system is phased out, and operations transition fully
to the new system. Parallel operation requires additional resources and infrastructure to maintain both
systems simultaneously. However, it offers lower risk and smoother transition, as users can gradually
adapt to the new system while still relying on the familiar processes of the old system.

3. Phased Changeover (Staged Rollout or Incremental Changeover):

Phased changeover involves gradually implementing the new system in stages or phases across different
departments, locations, or functionalities. Each phase focuses on a specific subset of users or business
processes, allowing for controlled testing and refinement of the new system before full deployment.
Phased changeover minimizes the impact on operations by spreading the transition over an extended
period, reducing the risk of disruptions. It also provides flexibility to adjust the implementation strategy
based on feedback and lessons learned from earlier phases. However, phased changeover may prolong the
overall transition timeline and require careful coordination and communication to ensure alignment across
different phases. Organizations may choose phased changeover when implementing complex systems or
when there are dependencies between different parts of the organization that need to be managed
separately.

QUESTION 22

Capital cost $000

Project A 300

Project B 500

Project C 450

Net cash inflow

Project A Cumulative cash inflow A Project B Cumulative cash inflow B

Project C Cumulative cash inflow C

Year 1 75 75 100 100 50 50

Year 2 125 200 200 300 75 125

Year 3 125 325 300 600 250 375

Year 4 100 425 300 900 300 675

Year 5 75 500 150 1150 200 825

Project A

Payback period = 2 + (100/125)

= 2 + 0.8

= 2.8 years

Net cash inflow= 75+125+125+100+75= 500

Annual net profit = 500/5 = 100

Average investment= 300/2= 150

ARR= Average annual profit/average investment

=100/150

=0.666

Project B

Payback period = 2 + (200/300)

= 2 + 0.666

= 2.666 years

Net cash inflow = 100+200+300+300+150= 1050

Annual net profit =1050/5 = 210

Average investment= 500/2= 250

ARR= Average annual profit/average investment

=210/250

=0.84

Project C

Payback period = 3 + (75/300)

= 3 + 0.25

= 2.25 years
Net cash inflow = 875

Annual net profit = 875/5 = 175

Average investment= 450/2= 225

ARR= Average annual profit/average investment

=175/225

=0.777

QUESTION 23

PROJECT E

Year 1

$40000+$10000=$30000 left to recover

Year 2

$30000+$10000=$20000 left to recover

Year 3

$20000+$10000=$10000 left to recover

Year 4

$10000+$10000=fully recovered

Year 4

$10000/$10000=full year needed

Payback period for project E= 4years

PROJECT F

Year 1

$250000+$40000+=$210000 left to recover

Year 2
$210000+$120000=$90000 left to recover

Year 3

$90000+$200000=fully recovered

Year 3

$90000/$200000=0.45 year needed

Payback period for project F=2.45 years

PROJECT G

Year 1

$75000+$20000=$55000 left to recover

Year 2

$55000+$35000=$20000 left to recover

Year 3

$20000+$40000=fully recovered

Year 3

$20000/$40000=0.5 year needed

Payback period for project G=2.5 years

PROJECT H

Year 1

$100000+$30000=$70000 left to recover

Year 2

$70000+$30000=$40000 left to recover

Year 3

$40000+$30000=$10000 left to recover

Year 4
$10000+$20000=fully recovered

Year 4

$10000/$20000=0.5 year needed

Payback period for H= 3.5 years

With a three year cut off period,accept F and G ,reject E and H

QUESTION 24

a.

Payback period for refinancing = $3,750 / $75

= 50 month

Payback period for refinancing is 50 month.

b.

Eric will finish graduate school in 4 years, at which time he will sell the house and move to another state.

So total Time in school = 2 × 12 month

= 24 month

Since, Payback period is more than time in spend in college. So he should not refinance.

QUESTION 25

a. Each Project's Payback Period and which project is preferred:- Payback period is the time needed to
recover the initial investment in the project from the cash flows generated by the project.

Project A:- It has even cash flows. So the payback period is Initial Investment/ Cash Flow

= 40,000/ 16,000 = 2.5 years.

Project B:- The cash flows are uneven so we need to calculate the cumulative cash flows for each period
and use the formula A + (B/C)

A is the last period with negative cumulative cash flow

B is the absolute value of the cumulative cash flow in period A

C is the cash flow immediately after the period A

The below table shows the cash flows and cumulative cash flows for Project B:-

Year Cash Flows Cumulative Cash Flows

0 -40,000 -40,000

1 4,000 -36,000

2 10,000 -26,000

3 16,000 -10,000

4 22,000 12,000

5 28,000 40,000

So, A = 3, B = |-10,000| Absolute Value (||) means we consider the negative number as positive, C =
22,000

Therefore, the Payback Period for project B = 3 + (10,000/ 22,000) = 3.45 years.

Project C:- We can construct a similar table for Project C with uneven cash flows and find out the
payback period.

Year Cash Flows Cumulative Cash Flows

0 -40,000 -40,000

1 28,000 -12,000

2 22,000 10,000

3 16,000 26,000

4 10,000 36,000

5 4,000 40,000

Therefore, the Payback Period for project C = 1 + (12,000/ 22,000) = 1.55 years.

The preferred project will be the one with the shortest payback period as it requires the shortest time to
recover the initial investment with the cash flows from the project.

Based on this, we will select Project C.

b. Each project's NPV and which project is preferred:- NPV is the difference between the present value of
cash inflows and present value of cash outflows.

NPV = Initial Investment + CF1/(1+k)1 + CF2/(1+k)2 + CF3/(1+k)3 + CFn/(1+k)n

Where, CF is cash flow and k is cost of capital.

So, NPV of Project A is -40,000 + 16,000/(1+0.15) + 16,000/(1+0.15)2 + 16,000/(1+0.15)3 +

16,000/(1+0.15)4 + 16,000/(1+0.15)5

= 13,634.48

Similarly, NPV of Project B = -40,000 + 4000/(1+0.15) + 10,000/(1+0.15)2 + 16,000/(1+0.15)3 +

22,000/(1+0.15)4 + 28,000/(1+0.15)5

= 8,059.48

NPV os Project C = 19,209.49

We must invest in the project with the greatest NPV. So we will select Project C.

c. We have selected Project C using both the methods i.e. Payback Period and the NPV Method. So
project C is the best project according to both the methods.