Project Initiation

1. Pine Valley Furniture Case Exercises

a. How were Pine Valley Furniture’s projects initiated? What is the focus for each of the new systems?

The project team which includes Jim, Jackie, and an intern(me), tasked with creating the PineValley Furniture online store call WebStore and a customer tracking system with a focus on corporate furniture. The plan is to use the economic feasibility analysis to forecast future revenue to earn an average return on interest.

b. Modify the Customer Tracking System’s economic feasibility analysis to reflect the modifications mentioned in this case problem. Use a discount rate of 10 percent. After the changes are made, what are the new overall NPV, ROI, and BEP? Make sure to include the rationale for any assumptions you make.

Percent NPV ROI BEP

20 35,303 0.24 0.403

10 20,734 0.12 0.223

Initially the higher discount rate brought about the largest return on investment as well as reaching the break-even point the quickest. Assuming PVF can capture at least half of the initial discount rate it essentially will take an additional almost a year and a half to reach its break-even point.

c. Modify the worksheet created in part b using discount rates of 12 and 14 percent. What impact do these values have on the overall NPV, ROI, and BEP?

12% 17,386 0.10 0.373

14% 14,295 0.09 0.536

With an increase on one-time cost and decrease on the discount rate, essentially there will be less value to include more days to reach a break-even point. Additionally a 2% increase on the discount essentially diminishes the overall NPV values.

c. Jim Woo would like to investigate how other online stores are targeting the business furniture market. Identify and evaluate two online stores that sell business furniture. Briefly summarize your findings.

Through evaluating Officefurniture.com and Ofconnection.com two online business furniture companies that focus on a corporate to small home and small office furniture transactions....