Question

1) A project manager is using a weighted factor method to decide which of four projects is best, given the company's limited resources. Each project has 1, 2, and 3 criteria. Their importance weights, and scores are as the follows. Project Greenlight has weights of 1, 2, and 3 with scores of 3, 1, and 1.  Project Runway has importance weights of 1, 2, and 3 with scores of 2, 2, and 1. Project X has importance weights of 1, 2, and 3 with scores of 2, 3, and 2. Project Ilenomit has importance weights of 1, 2, and 3 with scores of 2, 2, and 3. Which project should be chosen?

Project	Criteria	Importance Weight	Score	weighted scores
Greenlight	1	1	3
	2	2	1
	3	3	1
Runway	1	1	2
	2	2	2
	3	3	1
X	1	1	2
	2	2	3
	3	3	2
Ilevomit	1	1	2
	2	2	2
	3	3	3

	1.	the least desirable project is 8
	2.	the weighted scores for project Runway is 9
	3.	the project manager should choose is X
	4.	the weighted scores for project X is 15

2) A project requires an initial investment of $200,000 and will generate cash savings of $75,000 each year for the next five years. What is the payback period (round to whole year)?

Year	Cash Flow	Cumulative
0	($200,000)
1
2
3

	1.	the payback period is 3
	2.	after second year, the remaining balance for the project is ($25,000)

Answer 1

1.

weighted scores:

For Greenlight : 1*3 + 2*1 + 3*1 = 8

For Runway : 1*2 + 2*2 + 3*1 = 9

For X : 1*2 + 2*3 + 3*2 = 14

For Ilevomit: 1*2 + 2*2 + 3*3 = 15

Option a is false, because weighted score is highest of 15 and not 8.

Option b is true as Runway has 9 weighted score

Option c is false as the project manager should choose greenlight( lowest of 8) instead of X(which has 14)

Option d is false as weighted score for X is 14

2.

Payback Period = Cost of Project / Average Annual Cash Inflows = 200000/75000 = 2.67

can be rounded to 3.

So the payback period is 3 will be true.

After 2 years, it will generate only 150000 which is less than 200000 and left with 50000, so it's false

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