Project Management

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This assignment lean towards calculations heavily and network diagram. Hence an expert with Account and Finance background is much needed as well. Here are some of the materials and ebooks but still, expert can use their own materials and knowledge for this assignment. I would like to stress that a proper table and working steps on how to get the results for calculations Q1 is very important. My professor said he wants to see all the steps from the beginning until final answer.

Total of this assignment only 6 pages if 400 words per page meaning 2400 words total.

Can you please tell the expert to give step by step working towards the final answers. My professor said he require a full working calculations until the final answer with tables appropriately. Here’s the materials and ebooks as attached above. Expert can also use his/her knowledge but stay within the level of MBA.

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The given data is as follows.

Values in RM | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 |

a. Sales | 0 | 15,000 | 20,000 | 20,000 | 20,000 | 20,000 |

b. Terminal Value of Investment | 0 | 0 | 0 | 0 | 0 | 10,000 |

c. Fixed Cost | 3000 | 3000 | 3000 | 3000 | 3000 | 3000 |

d. Investment | 30000 | 0 | 0 | 0 | 0 | 0 |

Variable Cost = 30% of Sales

Values in RM | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 |

Variable Cost (30% of a) | 0 | 4500 | 6000 | 6000 | 6000 | 6000 |

Depreciation=10% of Initial Investment i.e, 10% of d.

=10% of 30000

Therefore Depreciation = RM 3000

The Cash flow statement for this project is shown below based on the given data.

Values in RM | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | ||||||

Cash Inflow | Cash Outflow | Cash Inflow | Cash Outflow | Cash Inflow | Cash Outflow | Cash Inflow | Cash Outflow | Cash Inflow | Cash Outflow | Cash Inflow | Cash Outflow | |

Sales | 0 | 15000 | 20000 | 20000 | 20000 | 20000 | ||||||

Terminal Value of Investment | 10000 | |||||||||||

Investment | 30000 | |||||||||||

Fixed Cost | 3000 | 3000 | 3000 | 3000 | 3000 | 3000 | ||||||

Variable Cost | 0 | 4500 | 6000 | 6000 | 6000 | 6000 | ||||||

Total | 0 | 33000 | 15000 | 7500 | 20000 | 9000 | 20000 | 9000 | 20000 | 9000 | 30000 | 9000 |

Based on the above cash flows, the net cash flow of each year is calculated as follows.

Net Cash Flow = Cash Inflow- Cash Outflow

Values in RM | Total Cash Inflow | Total Cash Outflow | Net Cash Flow |

Year 1 | 0 | 33000 | -33000 |

Year2 | 15000 | 7500 | 7500 |

Year 3 | 20000 | 9000 | 11000 |

Year 4 | 20000 | 9000 | 11000 |

Year 5 | 20000 | 9000 | 11000 |

Year 6 | 30000 | 9000 | 21000 |

Total | 105000 | 76500 | 28500 |

**Payback Period**

To calculate the payback period, the cumulative net cash flows are calculated, i.e., the cumulative cash flow of year 1 is -33,000, whereas the cumulative net cash flow of year 2 is the Net Cash flow of Year 1+Net cash flow of Year 2 = -33,000+7500=-25,000. The cumulative values are shown in the following table.

Net Cash Flow | Cumulative Cash Flow | |

Year 1 | -33000 | -33000 |

Year2 | 7500 | -25500 |

Year 3 | 11000 | -14500 |

Year 4 | 11000 | -3500 |

Year 5 | 11000 | 7500 |

Year 6 | 21000 | 28500 |

Due to uneven cashflows over the six years for this project, the formula used to calculate the payback period (PBP) is

PBP = Last Period of Negative Cash Flow+ Cumulative Value of Cumulative Cash Flow at the last period of negative cash flow/Total cash flow after the last period of negative cash flow.

From the above table, it is evident that the last period with negative cash flow is Year 4. The absolute value of cash flow during Year 4 is RM3500. The cashflow after Year 4 is RM11,000.

PBP =4 + (3500/11000)=4.318~4.32 Years.

Therefore, the payback period for this project is 4.32 Years.