You are a project manager deciding between two project: Project Apple and Project Banana. Here are the project costs and expected cash flows of each project.
Part 1
You are a project manager deciding between two project: Project Apple and Project Banana. Here are the project costs and expected cash flows of each project.
Project Apple Project Banana
Upfront cost $(100,000) $(75,000)
Year 1 cash flow 25,000 25,000
Year 2 cash flow 75,000 75,000
Year 3 cash flow 125,000 100,000
Year 4 cash flow 150,000 125,000
After year 4 each project is expected to be worthless. Suppose you view each project as equally risky. Your department uses a discount rate of 10% to evaluate all projects. Use an NPV analysis to determine which project you should pursue. Complete the table below (you may set this up on a spreadsheet and copy/paste here).
| Project A | Upfront | CF 1 | CF 2 | CF 3 | CF 4 |
| Yearly CF | |||||
| Discounted CF | |||||
| NPV | |||||
| Project B | Upfront | CF 1 | CF 2 | CF 3 | CF 4 |
| Yearly CF | |||||
| Discounted CF | |||||
| NPV | |||||
Which project, if any, do you choose and why?:
Part 2
For this part you need to design a conjoint analysis for a product based on the FIRST LETTER of your LAST NAME as follows:
Letters “A” to “E”: Breakfast cereal
Letters “F” to “J”: Yoga mat
Letters “K” to “O”: Jigsaw puzzle
Letters “P” to “T”: Wireless charger
Letters “U” to “Z”: Pet carrier
You may have to Google your product category to find about more about it if you are not familiar with it.
Come up with THREE FEATURES (other than price!) and THREE LEVELS that you could use in your analysis. Make sure they are quantifiable! So, avoid things like “high” “low” etc. See the examples we did in class and the hotel example in the text. Complete the following table.
Your first Name: ___________________
Your product category: ___________________
| Attribute 1: | Attribute 2: | Attribute 3: |
| Level 1: | Level 1: | Level 1: |
| Level 2: | Level 2: | Level 2: |
| Level 3: | Level 3: | Level 3: |
