- A sum of money is more valuable the sooner it is received. A dollar today is worth more than the promise of a dollar
tomorrow due to: Inflation and risk
- Before you invest money in a project you must compare its rate of return against other opportunities (other projects).
- FV = PV(1 + i) n
Where: FV = Future Value of an investment (project)
PV = Present Value of that same investment
i = Interest rate, discount rate or cost of capital
n = Number of years
Example: Invest $1000 today (PV) for 1 year(n) at an interest rate of 10% (i), the investment is worth $1000(1+.1) 1 or
$1210 at the end of year one
- When you have two different investments with varying rates of return, You must find a way to put both on equal terms.
- You put both on equal terms by evaluating all future cash flows at time zero (or today)
PV = FV
(1+i) n
- Example: You have a project that promises you $1000 of profit at the end of the first year with the discount rate at 10%
PV = $1,000 = $909
(1+0.1) 1
Therefore project is worth only $909 today
francis1897 answered the question on March 13, 2023 at 08:33
- Describe the quantitative project selection models(Solved)
Describe the quantitative project selection models
Date posted: March 13, 2023. Answers (1)
- Describe the qualitative project selection models(Solved)
Describe the qualitative project selection models
Date posted: March 13, 2023. Answers (1)
- What are the two project selection models?(Solved)
What are the two project selection models?
Date posted: March 13, 2023. Answers (1)
- What is a project selection model?(Solved)
What is a project selection model?
Date posted: March 13, 2023. Answers (1)
- Describe the SWOT analysis(Solved)
Describe the SWOT analysis
Date posted: March 13, 2023. Answers (1)
- What is the main goal of any project?(Solved)
What is the main goal of any project?
Date posted: March 13, 2023. Answers (1)
- What is a strategic plan?(Solved)
What is a strategic plan?
Date posted: March 13, 2023. Answers (1)
- What are the benefits to having the right team in a business case?(Solved)
What are the benefits to having the right team in a business case?
Date posted: March 13, 2023. Answers (1)
- What are the contents of a business case?(Solved)
What are the contents of a business case?
Date posted: March 13, 2023. Answers (1)
- What is the business case?(Solved)
What is the business case?
Date posted: March 13, 2023. Answers (1)
- What are the four key issues needing answers for all technology projects?(Solved)
What are the four key issues needing answers for all technology projects?
Date posted: March 13, 2023. Answers (1)
- Organizations should follow a documented consistent planning process for selecting IT projects. Mention the process(Solved)
Organizations should follow a documented consistent planning process for selecting IT projects. Mention the process
Date posted: March 13, 2023. Answers (1)
- State the reasons why projects are authorized?(Solved)
State the reasons why projects are authorized?
Date posted: March 13, 2023. Answers (1)
- What are the challenges posed by IT projects?(Solved)
What are the challenges posed by IT projects?
Date posted: March 13, 2023. Answers (1)
- Describe the The IT Product Life Cycle(Solved)
Describe the The IT Product Life Cycle
Date posted: March 13, 2023. Answers (1)
- With the aid of a diagram, discuss the project life cycle and IT development(Solved)
With the aid of a diagram, discuss the project life cycle and IT development
Date posted: March 13, 2023. Answers (1)
- State the characteristics of a project(Solved)
State the characteristics of a project
Date posted: March 13, 2023. Answers (1)