KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT

BALKUMARI, LALITPUR

Concepts and Practices of Project Management:

Assignment 2
Case Study: Mon Vie Breakfast Cereal

Submitted to:
Mr. Jayakar Vaidya
Associate Professor

Submitted by:
BBA, Year III, Semester I
Simrik Shrestha
Roll no: 177106

Date of Submission: September 05, 2019

Mona Vie Breakfast Cereals 2012
Question a. Which project will you recommend on the basis of strategic evaluation?

Answer:
The three projects of Mona Vie Food Industries are as follows:
a. Project A- Sikkim
b. Project B- New Flavor
c. Project C- UK

i. The strategic evaluation of the three projects is as given below. The score is to be
made on a scale of (1-10).

Score for Score for Score for

Questions
Project A Project B Project C
Does the project suit the organizational strategies? 8 9 7
How unique is the project? 4 9 8
How urgent is the project? 9 6 5
Will the project fulfill competitive advantage? 7 7 8
Will the project provide additional sales? 6 9 9
Total 34 40 37

ii. From the table above, we can find that Project B has the highest score. Now, giving
weights to each question, using Weighted Average Method, we get the following
answer.
Questions Weight A B C
Does the project suit organizational 25 8 9 7
strategies?
Weighted score 2.00 2.25 1.75
How unique is the project? 15 4 9 8
Weighted score 0.6 1.35 1.20
How urgent is the project? 20 9 6 5
Weighted score 1.80 1.20 1.00
Will the project fulfill competitive advantage? 25 7 7 8
Weighted score 1.75 1.75 2
Will the project provide additional sales? 30 6 9 9
Weighted score 1.80 2.70 2.70
Total 7.95 9.25 8.65
 iii. After calculating the Weighted Average, we now need to calculate the weighted score
for each project as follows

Questions Weight A B C
Does the project suit organizational strategies? 25 20 8 9 7
Weighted score 10 11.25 8.75
How unique is the project? 15 20 4 9 8
Weighted score 3 6.75 6
How urgent is the project? 20 20 9 6 5
Weighted score 9 6 5
Will the project fulfill competitive advantage? 15 20 7 7 8
Weighted score 5.25 5.25 6
Will the project provide additional sales? 30 20 6 9 9
Weighted score 9 13.5 13.5
Total 36.25 42.25 39.25

Thus, from the above results, we can conclude that, through the Strategic Evaluation, Project B-
New Flavor can be the best recommendation for Mona Vie Food Industries.

Question b. Find out cost of capital at cost of equity 15.106%.

Solution,
Given,
Debt% = 30%
Equity% =70%
Tax rate = 25%
Cost of Equity = 15.106%
Debt Cost= 9.00%
WACC= 12.58%
WACC= % debt* Cost of debt* (1-tax) + % Equity* Cost of Equity
= 30% * 9% * (1- 25%) + 70% * 15.106%
= 12.6%