Problem
• Perform a ?nancial analysis for a project using the format discussed in the course. Assume the projected costs and benefits for this project are spread over five years as follows: Estimated costs are $130,000 in Year 1 and $25,000 each year in Years 2, 3, 4, and 5. Estimated bene?ts are $0 in Year 1 and $75,000 each year in Years 2, 3, 4, and 5. Use an 12% discount rate. Use the NPV template provided (modify to suit your answer) and clearly display the NPV, ROI, and year in which payback occurs.
Write a paragraph explaining whether you would recommend investing in this project based on your ?nancial analysis. Explain your answer referring to the NPV, ROI and payback for this project.
• Create a weighted scoring model to determine which project to select. Assume the criteria are cost, strategic value, risk, and ?nancials, with weights of 10%, 40%, 20%, and 30%, respectively. Enter values for Project I as 90, 70, 85, and 50; Project 2 as 75, 80, 90, and 70; and Project 3 as 80 for each criterion. Use the weighted scoring model discussed in lecture material, create the model, calculate the weighted score, and graph the results.
Which project would you select? Why?