Exam 3: Project Selection and Portfolio Management

A project manager is using the net present value method to make the final decision on which project to undertake. The company has a 12% required rate of return and expects a 3% rate of inflation for the following four years. What is the NPV of a project that has cash flows as shown in the table?

Provide an example of a numeric and non-numeric project selection model and indicate what advantage each might hold over the other.

An options model could be used when financial criteria would change significantly over time.

What two simple rules should be followed when choosing a project selection approach?

Successful firms use project portfolio planning routinely to:

A project manager is using the payback method to make the final decision on which project to undertake. The company has a 15% required rate of return and expects a 5% rate of inflation for the following five years. What is the discounted payback of a project that has cash flows as shown in the table?

The first step in the Analytical Hierarchy Process:

The simplest method of project screening and selection is developing a list of criteria that pertain to the choice of projects and then applying them to alternatives.

Describe or define any four important attributes for screening models used to evaluate projects.

One facet of risk in project screening is:

The systematic process of selecting, supporting, and managing a firm's collection of projects is called:

What criteria might be employed to prioritize projects in a project portfolio? Choose any example project from recent business news and deduce which criteria were most important to the company in question.

Quality risk refers to the chance that:

A simplified scoring model addresses all the weakness of a checklist model for project screening.

Souder's project screening criterion of realism addresses the question:

A simple scoring model is used to decide among three projects that we'll call A, B, and C. The total score for project A is 30, for project B is 20, and for project C is 10. Which of the following statements is BEST?

Which statement about the use of the profile model is BEST?

How does the Analytical Hierarchy Process differ from a simple scoring model? Is it worth the extra effort?

If strategy and portfolio are not in sync, the firm is poised on the cusp of success.

The Analytical Hierarchy Process elegantly addresses scaling issues in criteria and negative utility in alternative scores.