Question

# 1. Three investment alternatives (A, B, and C) are being considered. The discounted present worth (PW)...

1. Three investment alternatives (A, B, and C) are being considered. The discounted present worth (PW) for the alternatives are \$35,000, \$30,000, and \$37,000, respectively. The three alternatives have different rankings in terms of employee morale (EM) and vendor reputation (VR). The following weights have been assigned to the three factors (PW, EM, and VR): 40, 35, and 25. On a scale from 1 to 10, the following ratings have been assigned to the three alternatives for the three factors:

Using the weighted factor comparison method, which investment alternative would be recommended?

 Ranking Score CA CRS R 1 5 7 S 2 7 5 NPW \$60K \$40K
 A B C PW 9.2 8 10 EM 9 10 8.5 VR 9.5 10 9

Weighted Factor Rating of Alternative A = ( Rating of PW* Weight of PW + Rating of EM* Weight of EM+ Rating of VR* Weight of VR)/(Sum of all weights) = (9.2*40+9*35+9.5*25)/(40+35+25)=(368+315+237.5)/100=920.5/100=9.205

Weighted Factor Rating of Alternative B = ( Rating of PW* Weight of PW + Rating of EM* Weight of EM+ Rating of VR* Weight of VR)/(Sum of all weights) = (8*40+10*35+10*25)/(40+35+25)=(320+350+250)/100=920/100=9.2

Weighted Factor Rating of Alternative C = ( Rating of PW* Weight of PW + Rating of EM* Weight of EM+ Rating of VR* Weight of VR)/(Sum of all weights) = (10*40+8.5*35+9*25)/(40+35+25)=(400+297.5+225)/100=922.5/100=9.225

Since alternative C has highest rating, Alternative C is recommended