Friday 27 January 2017

Project Management - What is the NPV of the proposal after taking into account the flotation costs



Assignment Solutions, Case study Answer sheets
Project Report and Thesis - Contact
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ARAVIND – 09901366442 – 09902787224



Project Management




CASE STUDY (20 Marks)


You manage a hotel resort located on the South Beach on the Island of Kovai in Hawaii. You are shifting the focus of your resort from a traditional fan-in the sun destination to ecotourism. Eco tourism focuses on environmental awareness and education. a) Convert the pool heating system from electric to solar system. b) Build a 4 mile nature biking trail. c) Renovate the horse bran. d) Replace the golf shop that accidently burned down after being struck by lightening. e) Launch a new promotional campaign with Hawaii airlines. f) Convert 12 adjacent acres into a wildlife preserve. g) Update all the bathrooms in condos that are 10 years old or older. h) Change hotel broachers to reflect ecotourism image. i) Test & revise disaster response plan. j) Introduce wireless internet
Services in café and lounge areas.



Answer the following question.



Q1. How would you classify the above projects in terms of compliance, strategic and operational?


Q2. How easy was it to classify these projects?


Q3. What made same above projects more difficult than others?


Q4. What do you think you now know that would be useful for managing projects at the hotel?



CASE STUDY (20 Marks)


You have been assigned to a project risk team of 5 members. Because this is a first time your organization has formally set up a risk team for a project, it is hoped that your team will develop a process that can be used on all future projects. Your first team meeting is next Monday morning. Each team member has been asked to prepare for the meeting by developing, in as much detail as possible, an outline that describes how you believe the team should proceed in handling project risks. Each team member will hand out their proposed outline at the beginning of the meeting. Your outline should include but not be  
handling risk events, Team activities, Team outputs.


Answer the following question.



Q1. Project risks can be eliminated if the project is carefully planned, Explain?


Q2. What is the difference between avoiding a risk and accepting a risk?


Q3. How you face the Schedule risk?


Q4. Explain the term RBS?



CASE STUDY (20 Marks)


Anand Enterprises is broadly diversified company with presence in a variety of sectors such as cement, textile, chemicals. After a thorough review of various capital projects undertaken in the last 5 years the executive committee of Anand Enterprises felt that the
quality of market and demand analysis of most of the projects was somewhat patchy. As a marketing analyst you have been invited by Arvind Swami, the managing director of Anand Enterprise, to do a seminar on market and demand analysis for the business heads of the company. Among other things, he wants you to address the following issues.


Answer the following question.



Q1. How should one evaluate secondary information?


Q2. What are the sources of uncertainties in demand?


Q3. Discuss the steps in a sample survey?


Q4. Briefly describe the various methods of demand forecasting?



CASE STUDY (20 Marks)



Microelectronics Corporation is currently at its target debt equity ratio of 5:1. It is considering a proposal to expand capacity, which is expected to cost Rs 500 million and generate after tax cash flows of Rs 130 million per year for the next 8 years. The tax rate for the firm is 30 percent. Mahesh the CEO of the company, has considered two financing options. a) Issue of equity stock. The required return on the company’s new equity is 20 per cent and the issuance cost will be 12 per cent. b) Issue of debentures at a yield of 13 percent. The issuance cost will be 3 per cent.



Answer the following question.


Q1. What is the WACC for Microelectronics?


Q2. What is Microelectronic’s weighted average flotation cost?


Q3. What is the NPV of the proposal after taking into account the flotation costs?


Q4. Do you have any suggestion to Mahesh?




Assignment Solutions, Case study Answer sheets
Project Report and Thesis - Contact
ARAVIND – 09901366442 – 09902787224



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