This is a systematic analysis of the Otacuschez case which entails an SMS order system… The company purposes to connect the bookstore/library to the coffee café so that the library users can use the café. The project is aimed at making it possible to request orders by the SMS system. The clients are allowed to enjoy the services of the library and a cafeteria without having to greatly alter their schedules hence saving on time and money as well (Roth, 2008).
The project is expected to be completed within 25 days.
Critical Path
PERT Chart
Path Duration
Path 1; D, G, I= 8+8+4=20 days
Path 2; A, C, F, H, I= 5+6+2+8+4=25 days
Path 3; B, E, I=4+4+4=16 days
The shortest Period to complete this project is therefore 16 days while the longest would be 25 days.
Cost-Benefit Analysis
Equipment/Installation
Other Development Costs
Net Present Value
NPV= Rt/(1+i)t
t=Cash flow time
i=Discount rate
Rt= Net cash flow rate
In this case, the Net cash flow is found by finding the difference between the outflow and the inflow which is, 342, 000-150,000=192, 000 SR.
t -stands for the respective year while, like 1, 2, 3
i-which is the discount rate is found by dividing the inflow by the outflow. As in,
150,000/342,000=0.44
Year 0
NPV= -342000/(1+0.44)0 = -342000
Year 1
NPV=192000/(1+0.44)1= 133333.333
Year 2
NPV=192000/(1.44)2= 92592.592
Yeah 3
NPV=192000/(1.44)3= 64300.411
The Net present value is more than zero, which is an indication that the business is viable.
Pay Back Period
This is the period that the made investment would take to ‘repay’ the money that has been invested in the business. Investments with shorter payback periods are preferred over those with longer payback periods. In this case, it would be, 342,000/150,000=2.28 years.
Discounted Pay Back Period
150000*3-133333.333-92592.592-64300.411 = 159773.664
BBP=159773.664/64300.411*12= 0.207066670227
Internal Rate of Return
It usually indicates the growth that is generated by a given project. A higher rate signifies the stability of that particular project hence it is preferable. It is the value of the discount rate whereby the negative cash flow is equal to the positive cash flow. It is an indication of efficiency, quality, and productivity.
Formula
= sum_^ frac{(1+r)^} = 0
NPV= 
r=0.15085
The NPV is calculated. If it is close to zero then the NPV=IRR in this case therefore, IRR= 0.15
From the findings, it is quite clear that the project is viable and profitable.
Bibliography
Roth, R. (2008). System analysis and design. John Wiley and Sons: New York.