Project Resource Management

Several people working on the Recreation and Wellness Intranet Project are confused about their responsibilities for the testing portion of the project. Recall that the team members include you, a programmer/analyst and aspiring project manager; Patrick, a network specialist; Nancy, a business analyst; and Bonnie, another programmer/analyst. Tony Prince is the project manager, and he has been working closely with managers in other departments to make sure everyone knows what’s going on with the project.

1.    Prepare a responsibility assignment matrix based on the following information: The main tasks for testing include writing a test plan, unit testing, integration testing for each of the main system modules (registration, tracking, and incentives), system testing, and user acceptance testing. In addition to the project team members, a team of user representatives is available to help with testing, and Tony has also hired an outside consulting firm to help as needed. Prepare a RACI chart to help clarify roles and responsibilities for these testing tasks. Document key assumptions you make in preparing the chart.

2.    The employees of the outside consulting firm and the user representatives have asked you to create a resource histogram to show how many people you think the project will need for testing, and to show when testing will occur. Assume that the consulting firm has junior and senior testers and that the user group has workers and managers. You estimate that you’ll need the involvement of both groups in testing over a period of six weeks. Assume that you’ll need one senior tester for all six weeks, two junior testers for the last four weeks, two user-group workers for the first week, four user-group workers for the last three weeks, and two user-group managers for the last two weeks. Create a resource histogram like the one in Figure 9-6(SEE ATTACHED) based on this information.

3.    One of the issues Tony identified is the ability to work effectively with the user group during testing. According to MBTI classifications, Tony knows that several of his project team members are very introverted and strong thinking types, while several members of the user group are very extroverted and strong feeling types. Write a one-page paper that describes options for resolving this issue, focusing on using a confrontation/problem-solving approach.

Project managementITInformation Technology

Financial Management
Unit VIII Assignment

This assignment will allow you to demonstrate the following objectives:

 Compute the net present value, profitability index, and internal rate of return for a given company.
 Predict the best choice for a company based on analysis of financial data.
 Compute a company’s WACC using given percentages.
 Calculate the cost of capital of a stock.
 Computer the after-tax cost of capital for bonds.

Instructions: Answer the questions directly on this document. When you are finished, select “Save As,”
and save the document using this format: Student ID_UnitVIII. Upload this document to BlackBoard as
a , docx, or .rtf file. Show all of your work.

1. The Turnip Company plans to issue preferred stock. Currently, the company’s stock sells for $110.
Once new stock is issued, the Turnip Company would receive only $90. The dividend rate is 8%, and the
par value of the stock is $100. Compute the cost of capital of the stock to your firm. Show all work.

2. The Maximus Corporation is considering a new investment, which would be financed from debt.
Maximus could sell new $1,000 par value bonds at a new price of $920. The bonds would mature in 13
years, and the coupon interest rate is 10%. Compute the after-tax cost of capital to Maximus for bonds,
assuming a 34% tax rate. Show work.

3. Connor Corporation is considering two projects (see below). For your analysis, assume these projects
are mutually exclusive with a required rate of return of 10%.

Project 1 Project 2
Initial investment $(465,000) $(700,000)
Cash inflow Year 1 $510,000 $850,000

Compute the following for each project:

 NPV (net present value)
 PI (profitability index)
 IRR (internal rate of return)

Based on your analysis, answer the following questions :

 Which is the best choice? Why?
 Which project should be selected and why? If the projects had the same IRR amounts but

different NPV totals, then how would you know which project to select? Explain.
 What would happen if both projects had negative NPV totals? Which project would you choose?

What do negative NPVs indicate? Explain.

Financial Management
Unit VIII Assignment

 Should we also use the payback method to assist us in project selection? Why or why not?
Explain.

4. The capital structure for Magellan Corporation is shown below. Currently, flotation costs are 13% of
market value for a new bond issue and $3 per share for preferred stock. The dividends for common stock
were $2.50 last year and have an estimated annual growth rate of 6%. Market prices are $1,020 for
bonds, $20 for preferred stock, and $30 for common stock. Assume a 34% tax rate.

Financing Type % of Future
Financing

Bonds (8%, $1k par, 16 year maturity) 36%
Common equity 45%
Preferred stock (5k shares outstanding, $50 par,
$1.50 dividend)

19%

Total % 100%

Compute the company’s WACC. Is this WACC considered reasonable given the assumptions and other
relevant information? Explain.