NET PRESENT VALUE ANALYSIS
Instructions: You may use the software tools available to you,
including Microsoft Excel, Word, PowerPoint, and Project, as needed. Please include your answers and other results
in this document in a different color.
1.The following are data for two IT projects for a
new database system. Prepare a spreadsheet for two projects, using the
following data. Amounts are in thousands of dollars. Calculate the NPV for
each. (Please assume a Discount Rate of 10%)
|
Year 1
|
Year 2
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Year 3
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Year 4
|
Year 5
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Total
|
|
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Project 1
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||||||
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Benefits
|
$0
|
$2,000
|
$3,000
|
$4,000
|
$5,000
|
tbd
|
|
Costs
|
$5,000
|
$1,000
|
$1,000
|
$1,000
|
$1,000
|
tbd
|
|
Cashflow
|
($5,000)
|
$1,000
|
$2,000
|
$3,000
|
$4,000
|
$5,000
|
|
Project 2
|
||||||
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Benefits
|
$2,000
|
$3,000
|
$5,000
|
$3,000
|
$1,000
|
tbd
|
|
Costs
|
$2,000
|
$2,000
|
$2,000
|
$2,000
|
$1,000
|
tbd
|
|
Cashflow
|
$0
|
$1,000
|
$3,000
|
$1,000
|
$0
|
$5,000
|
2. Prepare a precedence diagram for the
following tasks. All tasks have a finish-to-start relationship.
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Task
|
Duration
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Preceded By
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Followed By
|
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A
|
1
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None
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B, C, D
|
|
B
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2
|
A
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E
|
|
C
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3
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A
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E, F
|
|
D
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4
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A
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G
|
|
E
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5
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B, C
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F
|
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F
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6
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C
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H
|
|
G
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7
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D
|
H
|
|
H
|
8
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E, F, G
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None
|
3. Prepare a Gantt chart for the tasks
shown for question 2. (This can be hand drawn if you have no software to make
it, and then you can take a picture of your drawing and included it in this
document as an image).
4. Determine the critical path for the
tasks shown for question 2.
5. Your company is planning to launch a new IT
project starting July 1 that will last one year. You estimate that you will
need one full-time project manager, two full-time business analysts for the
first six months, two full-time senior systems analysts for the whole year,
four programmers for the months of February-May, and one full-time technical
writer for the last three months. Create a stacked column chart using Excel that
shows resources by month. Provide appropriate titles, axes labels, and legends.
6. Take the MBTI. There are several websites
you can use: www.humanmetrics.com, www.personalitytype.com, and
www.kiersey.com. Write a one-page summary discussing your MBTI type and its
opposite MBTI type. For example, if you are an INTJ, then its opposite is ESFP.
What challenges would you see working with this person on a project? What you
think about the MBTI as a team-building tool?
7. Your IT consulting company is trying to
decide which of four projects to bid. Information on each is in the table
below. Assume that all up-front investments are not recovered, so they are
shown as negative profits. Draw a diagram and calculate the expected monetary
value (EMV) for each project. Write a paragraph explaining which project(s) you
would choose to bid.
|
Project
|
Chance of
Outcome |
Estimated
Profit |
|
Project
1
|
50%
50% |
$120,000
-$50,000 |
|
Project
2
|
30%
40% 30% |
$100,000
$50,000 -$60,000 |
|
Project
3
|
70%
30% |
$20,000
-$5,000 |
|
Project
4
|
30%
30% 20% 20% |
$40,000
$30,000 $20,000 -$50,000 |
8. Your company has a technical support line
for customers to call. Create a Pareto diagram based on the information in the
following table. Create a spreadsheet using these data. List the most frequent
complaint first. Then add a column labeled "% of Total" and another
labeled "Cumulative %". Then enter formulas to calculate these items.
Then use the Excel Chart Wizard to create a Pareto diagram based on the data.
Use the Line - Column on 2 Axis custom type chart so that your resulting chart
looks similar to the one in Figure 8-1.
|
Customer
Complaints
|
Frequency/Week
|
|
Customer
is on hold too long
|
90
|
|
Customer
gets transferred to wrong number
|
20
|
|
Customer
gets cut off
|
50
|
|
Service
rep cannot answer customer's question
|
120
|
|
Service
rep does not follow through as promised
|
40
|
|
Service
rep is rude
|
10
|
9. Use the following WBS and duration
information for a project to build a new website. Prepare a Gantt chart and a
precedence diagram. Determine the critical path.
|
1.
|
Initiating
|
1 week
|
|
|
2.
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Planning
|
4
weeks, starting after Initiating ends
|
|
|
3.
|
Executing
|
||
|
3.1
Conduct User Interview
|
6
weeks, starts after Initiating ends
|
||
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3.2
Conduct User Survey
|
4
weeks, starts midway through User Interviews
|
||
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3.3
Site Content
|
|||
|
3.3.1
Develop Templates
|
12
weeks, starts after User Interviews and User Survey end
|
||
|
3.3.2
Write Articles
|
8
weeks, stats anytime after Site Content begins
|
||
|
3.3.3
Prepare FAQ
|
2
weeks, starts after User Interviews and User Survey ends
|
||
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3.4
Design Site
|
8
weeks, starts after User Interviews and User Survey end
|
||
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3.5
Build Site
|
16
weeks, starts after Design Site ends
|
||
|
3.6
Perform Integration Testing
|
2
weeks, starts after Build Site ends
|
||
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3.7
Conduct Acceptance Tests
|
2
weeks, starts after Integration Testing ends
|
||
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4.
|
Controlling
|
runs
for entire duration of project
|
|
|
5.
|
Closing
|
1
weeks, follows Acceptance Testing
|
|
10. Using the following information for a
one-year software development project, answer the following four questions.
PV = $23,000
EV = $20,000
AC = $25,000
BAC = $120,000 - What are the
cost variance, schedule variance, cost performance index, and schedule
performance index for the project?
- How is the
project doing? Is it ahead of schedule or behind? Is it under budget or
over?
- Use CPI to
calculate the estimate at completion (EAC)? Is the project performing
better or worse than planned?
- Use SPI as
your guide, how long will it take to finish the project?
