Two questions

31. You are developing a revolutionary new product for the telecom industry. It is a switching product that provides voice, video and data over the same pipeline, but uses a technology that has never been tried before. The potential return on investment for this product is $5 billion. Your estimated development costs are $150 million. If you go it alone, there is a 65% chance that you will succeed. You also decide to look into developing the product with a partner that has specific experience with this new technology. With a partner, there is an 85% chance that you will succeed, but development costs in this case are $250 million, of which the partner is carrying $50 million. Because you are shouldering 80% development costs, you decide to split the ROI with 80% going to you and 20% going to the partner if the project succeeds. What is the best EMV scenario from your organization’s point of view?


 a. Build the solution alone for $3.25 billion in potential return
 b. Build with a partner with a $4.25 billion in potential return
 c. Build with a partner with a $3.37 billion in potential return
 d. Build the solution alone for $3.35 billion in potential return


 


38. While executing the project it becomes obvious that you're not going to hit your end date. The project may be delayed by at least two months. This may impact the start date of another project that was due to start right after yours completed. What type of float best describes this situation?


a. Total float
b. Project float
c. Free float
d. Slack float


 


Please provide a brief explanation with the answer.


Thank you all.


 

 


Answer to Q. 31 - Option B


ROI - if went alone: 0.65 * 5 = $3.25 billion


Net ROI after deducting your investment = $3.25-0.15=$3.1 billion


ROI-if went with a partner: 0.85*5 = $4.25 billion


Your share on ROI: 0.8*$4.25=$3.4 billion


Net ROI after deducting your investment = $3.40-0.2=$3.20 billion


Answer: Go with a partner to get a net share of $3.2 billion


Chandra

I admire the way the guys tried to explain the answer. It requires experience and a lot of technical know-how. - Paul Savramis