Software Project Management · Unit 2 · 8 hrs
Project Analysis
Exam-focused notes for Project Analysis (Software Project Management, CSC425): what the TU syllabus asks and how it has actually been tested, with 11 solved past questions from this unit.
What this unit covers
- Introduction
- Strategic assessment
- Technical assessment
- Economic analysis: Present worth, future worth, annual worth, internal rate of return (IRR) method, benefit-cost ratio analysis, including uniform gradient cash flow and comparison of mutually exclusive alternatives
Economic analysis
Why do you think economic analysis is an important activity? Explain the terms present worth, future worth and annual worth. Illustrate on uniform gradient cash flow.[10]
--- Economic analysis is the systematic evaluation of the financial viability and resource allocation of a project or investment. It is an important activity for the following reasons: - Financial Viability Assessment: It determines whether a project is fin...
Full solved answer →Suppose the cost price of 1 piece of USB drive is Rs. 1000. You bought 1000 pieces and also paid Rs 2000 as a delivery charge. Calculate ROI if you would sell those USB drives for Rs. 1500 per piece. [5]
Item Value ------ Cost price per USB drive Rs. 1,000 Number of pieces bought 1,000 Delivery charge (one-time) Rs. 2,000 Selling price per USB drive Rs. 1,500 --- $$\text{Purchase cost} = 1000 \times 1000 = Rs.\ 10,00,000$$ $$\text{Total Investment} = 10,00,...
Full solved answer →Calculate discounted payback period for the following project.
| Year | Project |
|---|---|
| 0 | -200,000 |
| 1 | 100,000 |
| 2 | 50,000 |
| 3 | 50,000 |
| 4 | 100,000 |
| 5 | 50,000 |
[5]
Year Cash Flow ----------------- 0 -200,000 1 100,000 2 50,000 3 50,000 4 100,000 5 50,000 Missing data: The discount rate is NOT given. The discounted payback period cannot be computed without it. Following the standard textbook convention used in such pro...
Full solved answer →Write short notes on: a. Future worth b. Bubble chart [5]
Future Worth (FW) refers to the value of an investment at a specific point in the future, taking into account factors such as interest rates and price rise. It is a financial concept used to determine how much a present sum of money will be worth at a futur...
Full solved answer →Explain why discounted cash flow techniques provide better criteria for project selection than net profit or return on investment. Highlight on the applicability of IRR with respect to NPV. How can it be calculated manually?[10]
--- Net Profit simply measures the difference between total revenue and total cost without considering when the cash flows occur. Return on Investment (ROI) measures the percentage gain relative to the investment cost (as seen in the notes: ROI = Net Profit...
Full solved answer →Which project would you choose from following projects and why?
$$\begin{array}{|c|c|c|}\hline \text{Year} & \text{Project A} & \text{Project B} \ \hline 0 & -40,000 & -80,000 \ 1 & 5,000 & 2,000 \ 2 & 15,000 & 10,000 \ 3 & 5,000 & 70,000 \ 4 & 40,000 & 50,000 \ 5 & 50,000 & 50,000 \ \hline \end{array}$$
[5]
Year Project A Project B ---------------------------- 0 -40,000 -80,000 1 5,000 2,000 2 15,000 10,000 3 5,000 70,000 4 40,000 50,000 5 50,000 50,000 Note: No discount rate is provided, so discounted methods (NPV) cannot be computed. We use the Payback Perio...
Full solved answer →Short Notes: a) Annual Worth b) Risk Exposure [5]
--- Annual Worth (AW) refers to the value of an asset or investment over the course of a year. It is a commonly used economic analysis technique to evaluate the profitability or performance of an investment over a specific period of time. - Annual Worth is ...
Full solved answer →Differentiate between programme management and portfolio management. Define Payback period. How can it be used as an evaluation technique? What are its advantages and disadvantages?[10]
--- Basis Programme Management Portfolio Management --------- Definition Management of a group of related projects coordinated together to obtain benefits not available from managing them individually Management of a collection of projects and programmes gr...
Full solved answer →Calculate ROI for the following project
$$\begin{array}{|c|c|}\hline \text{Year} & \text{Project} \ \hline 0 & -50000 \ 1 & 5000 \ 2 & 5000 \ 3 & 20000 \ 4 & 40000 \ 5 & 50000 \ \hline \end{array}$$
[5]
Year Cash Flow (Rs.) ---------------------- 0 -50,000 (investment) 1 +5,000 2 +5,000 3 +20,000 4 +40,000 5 +50,000 - Initial Investment = Rs. 50,000 - No discount rate specified, so this is simple (average) ROI. --- $$ \text{Total Benefits} = 5000 + 5000 + ...
Full solved answer →Short Notes: 1. Present worth 2. PERT diagram [5]
--- Present Worth (PW) is also called Discounted Cash Flow (DCF), Present Value (PV), or Net Present Value (NPV). It is a financial measure used to determine the current value of a stream of future cash flows. - It is a widely used method for evaluating inv...
Full solved answer →Strategic assessment
Elaborate on the issues and questions to be considered during strategic assessment. List the categories of direct cost and benefits and provide two examples of each.[10]
Strategic assessment is the initial evaluation phase of a project that determines whether a proposed system or project aligns with the organization's overall goals and whether it is worth pursuing. The following issues and questions must be carefully consid...
Full solved answer →Make Unit 2 stick
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