Assignment 3 PM II

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Assignment III Vallapureddy Shashank Reddy University of Central Missouri

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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 company’s 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.

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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 firm’s 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.

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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