BUS 517 Week 2 DQ 1

Discuss the rationale why organizations should not solely rely on ROI to select projects.

Two new software projects are proposed to a young start-up company. The Alpha project will cost $150,000 to develop and is expected to have annual net cash flow of $40,000. The Beta project will cost $200,000 to develop and is expected to have annual net cash flow of $50,000. The company is very concerned about their cash flow. Using the payback period, select one of the two project options and identify what you think the cash flow will be. Make sure that you explain your answer using concepts and terminology covered in the text.