Project Management MBA 527

Assignment 1

Problem 18:
Initial cost of Project = $75,000
Project cash inflow:
Year 1 = $20,000
Year 2 = $25,000
Year 3 = $30,000
Year 4 = $50,000
Required rate of return = 0.2

We obtained the Net Present Value of $417.95 for the project using the NPV
command in MS Excel.

Problem 21:

Category
Labor costs
Labor
productivity
Labor supply
Union relations
Material Supply
Transport costs
Infrastructure
Total

Weig
ht
20
20
10
10
10
25
5
100

A
Weight
A
ed
1
20
2
2
3
2
1
2

40
20
30
20
25
10
165

B
weight
B
ed
2
40
3
1
3
1
2
2

60
10
30
10
50
10
210

C
weight
C
ed
3
60
1
3
2
1
3
2

20
30
20
10
75
10
225

Since the weighted score of location C is the highest, we need to choose

Location C as our option.

Problem 22:
a)

Category
Labor costs
Labor
productivity
Labor supply
Union relations
Material Supply
Transport costs
Infrastructure
Total

Weig
ht
20
20
10
25
10
10
5
100

A
Weight
A
ed
1
20
2
2
3
2
1
2

40
20
75
20
10
10
195

B
weight
B
ed
2
40
3
1
3
1
2
2

60
10
75
10
20
10
225

C
weight
C
ed
3
60
1
3
2
1
3
2

20
30
50
10
30
10
210

With the given change in weights to Union relations and Transport costs, the
highest weighted score/most favorable is Location B.

b) If Transport cost score changed to 3 for A and 2 for C.

Category
Labor costs
Labor
productivity
Labor supply
Union relations
Material Supply
Transport costs
Infrastructure
Total

Weig
ht
20
20
10
25
10
10
5
100

A
Weight
A
ed
1
20
2
2
3
2
3
2

40
20
75
20
30
10
205

B
weight
B
ed
2
40
3
1
3
1
2
2

60
10
75
10
20
10
225

C
weight
C
ed
3
60
1
3
2
1
2
2

20
30
50
10
20
10
200

The highest weighted score is still location B. So the change in score for A
and C did not have a effect.
c) With Tax consideration

Category
Labor costs
Labor
productivity
Labor supply
Union relations
Material Supply
Transport costs
Infrastructure
Tax
Total

Weig
ht
20
20
10
25
10
10
5
15
115

A
Weight
A
ed
1
20
2
2
3
2
3
2
3

40
20
75
20
30
10
45
250

B
weight
B
ed
2
40
3
1
3
1
2
2
2

60
10
75
10
20
10
30
255

C
weight
C
ed
3
60
1
3
2
1
2
2
1

20
30
50
10
20
10
15
215

As per table above, Highest weighted score is still Location B even after Tax
consideration.
But this recommendation will have to be made under the assumption that
the total weights is greater than 100.
If the weights are linearly reduced to a total of 100, the answer still remains
Location B.

Problem 23
Let us assume Class of clientele as a weight of 1.0
According to the problem, remaining weights are as follows,
Rent = 90% of Class of clientele= 0.9*1 = 0.9
Indoor Mall = 95% of Rent = 0.95*0.9 = 0.855
Volume = 80% of Rent = 0.80*0.9 = 0.72
Populating the Table,

Class of
clientel
e
Rent
Indoor
Mall
Volume
Total

Weigh Loc
t
1

Wt
Loc 1

Wt
Loc 2

Lo
c
2
3

1.0

0.9
0.855
0.72

Wt
Loc 3

Loc
4

Wt
Loc 4

Lo
c
3
1

3
3

2.7
2.565

2
1

1.8
0.855

1
3

0.9
2.565

3
1

2.7
0.855

2.16
9.425

1.44
7.095

2.16
6.625

0.72
7.275

Wt
Loc 3

Loc
4

Wt
Loc 4

2.7
2.565

3
1

2.7
0.855

Location 1 is the best option.

Problem 24
If Location 3 rent score is raised to good.

Class of
clientel
e
Rent
Indoor

Weigh Loc
t
1

Wt
Loc 1

Wt
Loc 2

Lo
c
2
3

Lo
c
3
1

1.0

0.9
0.855

3
3

2.7
2.565

2
1

1.8
0.855

3
3

Mall
Volume
Total

0.72

2.16
9.425

1.44
7.095

2.16
8.425

0.72
7.275

Even after the adjustment to Location 3 rent has been made, the highest
score/most favorable is still Location 1.