Task 2 (a)(Answers)

PROJECT A - TV STATION

YEARS

Description

Future Value
X Discount
Rate (RM
000 000)
Present
Value

1-5

Set Up
Cost

Annual
Running Cost

Value Of
asset
Released

Earning

Earning

Earning

Earning

Earning

(250,000,0
00)

RM100 X
4.212

RM40 X
0.747

RM60 X
0.943

(421,200,000)

29,880,000

56,580,000

(150% X
RM60 =
RM90) X
0.890
80,100,000

(150% X
RM90 =
RM135) X
0.840
113,400,000

(150% X
RM135 =
RM202.5) X
0.792
160,380,000

Net
Present
value

(150% X
RM202.5 =
RM303.75) X
0.747
226,901,250
(3,958,750
)

PROPOSAL B - SATELLITE
YEARS

Description
RM 000 000

1-6

Set Up
Cost

Annual
Running
Cost

Value Of
asset
Released

Earning

Earning

Earning

Earning

Earning

Earning

(120% X
RM138.24
=
RM165.88
8) X
0.747
123,918,3
36

(120% X
RM165.888
=
RM199.066)
X 0.705

(1/2 X
RM700)

Future Value
X Discount
Rate (RM
000 000)

Present
Value

(350,000,0
00)

(1/2 X)
RM50 X
4.917

(1/2 X)
RM10 X
0.705

RM80 X
0.943

(120% X
RM80 =
RM96) X
0.890

(120% X
RM96 =
RM115.2) X
0.840

(120% X
RM115.2=
RM138.24)
X 0.792

(122,925,00
0)

3,525,000

75,440,000

85,440,000

96,768,000

109,486,08
0

140,341,530

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Net
Present
value

161,993,9
46

 Task 2 (b)(Answers)

Project A have a negative Net Present Value (NPV) values should be rejected because the present value of the stream of benefits is

insufficient to recover the cost of the project.

Proposals B have a positive Net Present value b(NPV) its with high initial investment
The Proposal B option should be pursue
Before choosing any option a full appraisal will be carried out and not only depending on the value
above such as

The basic processes of the project choosing are:

Scope planning specifies the in-scope requirements for the project and facilitates creating the work breakdown structure.

Preparing the work breakdown structure specifies the breakdown of the project into tasks and sub tasks.

Project schedule development specifies the entire schedule of the activities detailing their sequence of execution.

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Resource planning specifies who will do what work at which time of the project and if any special skills are needed to accomplish the
project tasks.

Budget planning specifies the budgeted cost to be incurred in the completion of the project.

Procurement planning focuses on dealing with vendors outside of your company

Risk management planning charts the risks, contingency plan and mitigation strategies.

Quality planning for quality assurance to be applied to the project.

Communication planning on the communication strategy with all project stakeholders.

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