Department of 
 Industrial Engineering http://ie.bilgi.edu.tr

IE 370 - ENGINEERING PROJECT MANAGEMENT Homework #1
Thursday 26 February 2015

Due date: 5 March 2015 (return to Burak Tekin before 5:00 pm or during the lecture hour)

Question 1: You want to buy a new car and need to make a decision. Use a weighted scoring approach to make the selection. Your criteria are style, reliability and fuel economy. Your car alternatives are Honda, Fiat, Ford, Mazda. You value reliability more than style and fuel economy. Style and fuel economy have the same importance for you. Honda is excellent for reliability and fuel economy, good for style. Fiat is very good for style and fuel economy, good for reliability. Ford is excellent for style, very good for fuel economy and acceptable for reliability. Mazda is very good for fuel economy, good for reliability and acceptable for style. Which car would you buy?

Question 2: A project requires an initial investment of $225,000 and is expected to generate the following net cash inflows: Year Cash inflow
1 2 3 4

$95,000

$80,000

$60,000

$55,000

Compute net present value of the project if the minimum desired rate of return is 12%.

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 Department of 
 Industrial Engineering http://ie.bilgi.edu.tr

Question 3: The management of National company is considering three competing investments investment P, investment Q and investment R. The information about the requirement of initial amount of investment, present value of net cash inflow and net present value of all three investments is given below: Investments P Investment Required Present Value of Net Cash Flow 35.000 $ 36.000 $ 1.000 $ Q 20.000 $ 21.000 $ 1.000 $ R 5000 $ 6.000 $ 1.000 $

Choose the most desirable proposal using present value index (profitability index). Question 4: Please read the case “The Quantum Bank” from the book (4th Edition,