What is NPV?

What is updated NPV?

What is the Planned Value (PV) for this project at this point (18 months) of the project?

What is the Earned Value (EV) after the reported period of work, at the rate they have progressed?

What is the Actual Cost (AC) after the reported period of work?

What is the Cost Variance (CV) for the Project?

What is the Schedule Variance (SV) for the Project?

What is the Cost Performance Index (CPI)?

What is the Schedule Performance Variance (SPI)?

What is the Estimate at Completion (EAC)?

What is the Estimate Time to Complete in months (whole months rounded up if needed)?

Cutting Edge Sensors Ltd. has taken $2.5M worth of investor stock to start a 3 year project that is estimated to earn $5M by the end of the project ($2M at end of year 2, and $3M at the end of year 3). The yearly costs involved are $500,000 for the length of the project.

Investors had the opportunity to invest in another project expected to earn 10% per year.

What is the ROI?

(format: xx.x e.g. 99.9 or -99.9)

To complicate the situation, the CEO is considering the possibility of buying infrastructure that would make in- house manufacturing of component parts normally bought from suppliers. This would increase the initial cost required to fund the project to a total of $4M (from $2.5M). This would reduce ongoing yearly costs to $150,000 (from $500,000).

What is the updated ROI?

(format: xx.x e.g. 99.9 or -99.9)

NPV is a financial metric used to evaluate the profitability of an investment by comparing the present value of expected cash flows with the initial investment. Updated NPV refers to the recalculated net present value after incorporating changes in project parameters.

The Planned Value (PV) at 18 months would depend on the specific progress of the project and the budget allocated for that period. Without this information, it is not possible to determine the PV at 18 months accurately.

The Earned Value (EV) after the reported period of work can be calculated by multiplying the percentage of completed work by the budgeted cost of the work scheduled to be completed by that period.

The Actual Cost (AC) after the reported period of work represents the actual expenses incurred during that period.

Cost Variance (CV) is the difference between the earned value (EV) and the actual cost (AC). Schedule Variance (SV) is the difference between the earned value (EV) and the planned value (PV).

Cost Performance Index (CPI) is the ratio of earned value (EV) to actual cost (AC), indicating the cost efficiency of the project. Schedule Performance Variance (SPI) is the ratio of earned value (EV) to planned value (PV), reflecting the schedule efficiency of the project.

The Estimate at Completion (EAC) represents the projected total cost of the project based on current performance. The Estimate Time to Complete is the projected duration of the remaining work.

The ROI (Return on Investment) is the profitability measure expressed as a percentage. It is calculated by dividing the net profit (earnings minus costs) by the initial investment and multiplying by 100.

Step 2: NPV (Net Present Value) is a financial metric used to assess the profitability of an investment by comparing the present value of expected cash inflows with the initial investment. Updated NPV refers to the recalculated net present value after incorporating changes in project parameters such as cash flows or discount rates. It helps in determining whether an investment is financially viable.

Planned Value (PV) represents the estimated cost of the work scheduled to be completed at a particular point in the project. It serves as a baseline for measuring project performance. Without specific information about the progress and budget allocation, it is not possible to determine the PV at 18 months accurately.

Earned Value (EV) is the estimated value of the work completed after the reported period. It is calculated by multiplying the percentage of completed work by the budgeted cost of that work. EV provides an objective measure of the actual progress of the project.

Actual Cost (AC) represents the actual expenses incurred during the reported period. It includes all the costs associated with the project up to that point. AC helps in comparing the actual costs with the planned costs and assessing the financial performance of the project.

Cost Variance (CV) is the difference between the earned value (EV) and the actual cost (AC). A positive CV indicates that the project is under budget, while a negative CV suggests that it is over budget.

Schedule Variance (SV) is the difference between the earned value (EV) and the planned value (PV). A positive SV indicates that the project is ahead of schedule, while a negative SV implies a delay in the project timeline.

Cost Performance Index (CPI) is the ratio of earned value (EV) to actual cost (AC). CPI greater than 1 indicates that the project is performing better than expected in terms of cost efficiency.

Schedule Performance Variance (SPI) is the ratio of earned value (EV) to planned value (PV). SPI greater than 1 signifies that the project is progressing ahead of schedule.

Estimate at Completion (EAC) represents the projected total cost of the project based on current performance. It takes into account the actual costs incurred and estimates the remaining costs.

The Estimate Time to Complete is the projected duration needed to complete the remaining work. It provides an estimate of the time required for the project's completion.

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