Incident for discussion:

What information does Alison need to determine Kelsey’s proposed project's

probable impact on the department's other projects?
Alison needs certain information in order to assess Kelsey's planned project's likely
impact on the department's other projects.
The estimation of project management properties and the company's capital cost
and the number of welds that will need to be redone and the rework expenses.
The estimation of the time it will take to finish the failed welds again for flawless
welding. Consideration of the number of workers and raw materials required to
finish Kelsey's project. If the resources are allocated to Kelsey's project, the impact
on other initiatives. Finally, the significance of other initiatives and their
precedence over one another.
Should her findings affect her decision about Kelsey’s project?

Her findings may have no effect on her choice about Kelsey's initiative. If her
findings indicate that starting Kelsey's proposed project is more economically
feasible and necessary, she will prefer it as their primary endeavor.
Before deciding on Kelsey's idea, Alison would have to consider the views of the
chief Engineer and other authorities. before deciding on Kelsey’s project. Before
progressing with Kelsey's work, these economic costs should be immediately
demonstrated to the chief Engineer.
 Case study 2:
Answer of question 1:

𝐼𝑜 is the net cash flow,

Ft is the cash inflow in that particular year,
K is the discount rate
t is the year number

First Year Second Third Discount Developmen Total Labor

Projects Revenue Year Year Rate (%) t Time cost@$52/hou NPV
Revenue Revenue (hours) r
1 $750,000 $675,000 $607500 12 1250 $65,000 $1,575,155
2 $250,000 $262,500 $275625 12 400 $20,800 $607,862
3 $500,000 $525,000 $551250 12 750 $39,000 $1,218,324
4 $1,000,000 $1,100,0 $1,210,0 12 2500 $130,00 $2,501,024
00 00 0
5 $2,500,000 $2,875,0 $3,306,2 12 1875 $97,500 $6,779,899
00 50
6 $1,300,000 $1,365,0 $1,433,2 12 6250 $325,00 $2,944,043
00 50 0

Calculation of Project 1:
 The revenue decreases by 10% in the subsequent year.

750000 675000 607500

𝑁𝑃𝑉 = −65000 + (1+0.12) + +
( 1+ 0.12 )2 ( 1+ 0.12 )3
= $1,575,155

Calculation of Project 2:

The revenue increases by 5% in the subsequent year

250000 262500 275625

𝑁𝑃𝑉 = −20800 + (1+0.12) + (1+0.12)2 + ( 1+ 0.12 )3 ¿ = $607,862
¿

Calculation of Project 3:

Note: Revenue increases by 5% annually

500000 525000 551250

𝑁𝑃𝑉 = −39000 + (1+0.12) + (1+0.12)2 + (1+0.12)3 = $1,218,324

Calculation of Project 4:

Revenue increases by 10% annually

1000000 1,100,000 1,210,000

𝑁𝑃𝑉 = −130000 + (1+0.12) + (1+0.12)2 + (1+0.12)3 = $2,501,024
 Calculation of Project 5:
Revenue increases 15% annually.

2500000 2875000 3306250

𝑁𝑃𝑉 = −97500 + (1+0.12) + + = $6,779,899
( 1+ 0.12 )2 (1+0.12)3

Calculation of Project 6:

Revenue increases 5% annually

1300000 1365000 1433250

𝑁𝑃𝑉 = −325000 + (1+0.12) + + = $2,944,043
( 1+ 0.12 )2 ( 1+ 0.12 )3

Project 1 combines a calendar with an email program. The expenditure report is

being updated in Project 2.
Portfolio tracking is the third project. Projects 4,5, and 6 are the new projects of
spreadsheet, browser, and travel planning apps respectively.
Handstar should pursue Project 1 among the current projects and Project 5 among
the future ones, based on the aforementioned estimates, as these two have the
greatest NPV values in their respective categories.