Assignment
jamesblent
assignment_1_project_methodology_drill.pptUNCLASSIFIED
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Project Recommendation
- British Motor Works (BMW) has decided to realize its strategic differentiation by launching a new line of 7 Series vehicles that offer superior power but, alternatively, uses "green energy" vice diesel fuel. BMW has three proposed projects under consideration but can only fund one of three alternatives. You will perform a Business Case Analysis (BCA) on all three considerations on the basis of Net Present Value (NPV), Return on Investment (ROI), and Pay Back Period (PBP); ranking the projects most desirable to least desirable. See Assignment 1 and pay particular attention to my comments in RED.
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Choose Your Project
NPV
http://www.investopedia.com/calculator/netpresentvalue.aspx
ROI = Earnings – Investment / Investment
PBP = Investment/Cash Flows
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BMW 7.1
http://www.investopedia.com/calculator/netpresentvalue.aspx
| SilasCo | Cash Flows |
| Mobile | $162,000 |
| Funded at $2.75M | $72,100 |
| Discount Rate 5% | $327,215 |
| 3 Years to Delivery | $518,119 |
| $228,000 | |
| $216,275 | |
| $187,500 | |
| $296,700 | |
| $312,275 | |
| $144,900 | |
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The BMW Breeze 7. 2
http://www.investopedia.com/calculator/netpresentvalue.aspx
| Project BMW Breeze | Cash Flows |
| The BMW Breeze 7.1 | $295,000 |
| Funded at $1.8M | $828,100 |
| Discount Rate 5% | $513,662 |
| 3 Years Delivery | $158,236 |
| $282,000 | |
| $261,275 | |
| $181,880 | |
| $178,600 | |
| $123,175 | |
| $162,765 | |
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The BMW Freedom 7.3
http://www.investopedia.com/calculator/netpresentvalue.aspx
| Project BMW Freedom | Cash Flows |
| The BMW Freedom 7.3 | $261,000 |
| Funded at $1.58M | $169,200 |
| Discount Rate 4% | $300,215 |
| 3 Years to Delivery | $185,500 |
| $128,000 | |
| $126,275 | |
| $718,500 | |
| $269,600 | |
| $213,175 | |
| $144,900 | |
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Narrative Analysis
When companies decide on their strategic projects, considerations move beyond just quantitative data.
Using your overall project ranking for BMW, write a narrative that addresses the risks and trade-offs BMW should consider.
For example, if the ROI of a given project consideration is unfavorable what are the risks associated with taking on that endeavor?
On the other handed, if the ROI is favorable and the PBP is least favorable, what are the trade-offs to consider?
Write a narrative for each project, addressing the pros, cons, and trade-offs.
