COLLEGE OF ENGINEERING

BMM3023 ENGINEERING MANAGEMENT & SAFETY

SEMESTER 2 – 2022/2023

GROUP PROJECT REPORT

TITLE: Tesla Group

LECTURER: ASSOC. PROF. IR. TS. DR. KUMARAN A/L KADIRGAMA

DATE OF SUBMISSION: 26/6/2023

No. Matrix No. Name

1 MH19079 SIVARAJ A/L RAVI
2 MA19055 KAOVINATH APPALASAMY
3 MH20068 NAVIIN A/L DHAYALAN
4 MA20195 DARVIN A/L SELVADORAI
TABLE OF CONTENTS
1.0 INTRODUCTION
2.0
3.0 METHODOLOGY
4.0 RESULTS AND DISCUSSION

4.1 INTRODUCTION

In this segment, we will analyse the financial portfolio method to improvise a better
decision for the strategic management process in quantitative analysis. In this method, we
will develop the payback period, Return on Investment (ROI) and Net Present Value (NPV)
within a 4 year duration and with a rate of return (ROR) of 15%.

4.1 FINANCIAL PORTFOLIO

Unit Price Initial Expected Revenue Revenue Revenue Revenue

(RM) Investment Annual 1st year 2nd year 3rd year 4th year
(RM) Sales Cash Cash Cash Cash
(RM) Flow Flow Flow Flow
(RM) (RM) (RM) (RM)
Model 300000 18000 600000 6500 6500 6500 6500
A
(SUV)
2023
Model 280000 14900 520000 5000 5000 5000 5000
B
(Sedan)
2023
4.2 PAYBACK PERIOD

This phrase describes how long a project will take to pay back an investment. For
individuals and businesses, the payback period is crucial because they invest money primarily
to be reimbursed. In essence, an investment becomes more valuable the faster its payback
period is.

Payback period = Investment/Annual Cash Flow

a) Model A (SUV) 2023

Payback period = 18000/6500 = 2.77 years

b) Model B (Sedan) 2023

Payback period = 14900/5000 = 2.98 years

Model A's investment will require 2.77 years to recover the project investment, while Model
B will require 2.98 years. Model A is employed in terms of payback time due to its quicker
paybacks.

4.3 RETURN OF INVESTMENT (ROI)

ROI is used to assess an investment's effectiveness or profitability or to compare the

effectiveness of several distinct investments.

ROI = Annual Casual Flow/Investment = 1/Playback period

a) Model A (SUV) 2023

ROI = 6500/18000 = 36.11%

b) Model B (Sedan) 2023

ROI = 5000/14900 = 33.56%

Model A is more effective than Model B in terms of ROI.

4.4 NET PRESENT VALUE (NPV)

The difference between the current value of cash inflows and withdrawals over a
period is known as net present value (NPV). NPV is a tool used in investment planning and
capital budgeting to evaluate a project's profitability. It is the outcome of computations made
to determine a future stream of payments' current value.

NPV =

a) Model A (SUV) 2023

65 00 65 00 65 00 65 00
(
NPV = (1+0.15)1 + (1+0.15)2 + (1+0.15)3 + (1+0.15)4 ) – 18000
= 557.36

b) Model B (Sedan) 2023

NPV =
50 00
(1+0.15)
1 +
50 00
(1+0.15)
2 +
50 00
(1+0.15)
3 +
50 00
(1+0.15)
4 ) – 14900
= - 625.11
4.4 DISCUSSION

A financial portfolio assessment places the 2023 Tesla Model A (SUV) ahead of the
Model B (Sedan). Shorter payback times, more efficiency, and a minimum targeted rate of
return are all features of Model A (SUV). An excellent return on investment benefits both the
investor and the business. It indicates that the investment's returns outweigh its costs. The
management of the company must be vigilant in order to increase sales and revenues or drive
up stock values in the event that something bad occurs. A net increase in profits would occur
from either of them.

The shorter payback period is preferred since it signifies that the investment's risk
level is only for a shorter period of time and is therefore connected with a lower initial
investment cost. In order to keep this concise, we must experiment with the selling channels
to attract new clients while over time still making money from them. In order to boost
revenue and shorten the payback period, we must first choose the appropriate price point.
expanding the clientele for the business. For instance, encouraging the purchase of add-ons
like technical help, a guarantee, and other items that would enhance customers' expenditure.
Last but not least, stop the customer from cancelling their subscription with the business.
Make any offer that might encourage them to stay.

Because of incorrect information of "what to do," "how long it will take," and
unforeseen events, uncertainty may occur in the future. No estimation technique can
eliminate uncertainty. For instance, both NPV values would produce negative results if the
RoR value rose from 15% to 20% in the future, making both less likely to be picked. The rate
of return (RoR), which is used to calculate an investment's profit or loss over time, must not
alter over time.

Payback periods can speed up project appraisal and help to lower the risk of losses,
but this approach has its limitations. First of all, it ignores the concept of the time worth of
money. Second, it ignores the fact that a cent earned today is far more valuable than one that
will be paid in the future. Additionally, it disregards the financial influx that occurs beyond
the payback term.
5.0 CONCLUSION

5.1 INTRODUCTION

As the project manager for this new project that focuses on electric cars, we can
employ the knowledge of project management provided by a firm. We can evaluate and
ascertain the fundamental management of net present value, rate of investment, and annual
rate of return using the facts presented. Furthermore, we can choose the series that will yield
the best results in a present worth analysis and to determine the associated uniform annual
costs. If we carefully apply these strategies throughout project planning, we can predict how
the project will turn out. Additionally, we think that our strategies will benefit the business
financially while also promoting healthy competition and a great work atmosphere.

5.2 RECOMMENDATIONS

The recommendations made by this project should also take the nature of the
underlying manufacturing process into account. Prior to applying the principles of sketches
and wireframes to the creation of the Tesla car, we must first design the product in accordance
with customer expectations and current global needs. We must also take into account a
number of other minor details, such as design elements and features. The most crucial
variables to take into account are ranking, sources, reporting, and portfolio management. We
also need to understand how to figure out how much money we will make after selling and
marketing the products. To further improve the product's quality in the upcoming year, we
need a strong reporting system, such as one that distributes feedback forms to clients and
customers. These suggestions will make our organisation more solid and improve work
management going forward.
6.0 REFERENCES