Research Paper

Before developing a risk management plan an analysis of risk needs to be performed. This analysis should include all aspects of the project that may be part of

3. Estimate the project’s NPV. Would you recommend that Tucker Hansson proceed with the investment?

The following short case will give you a good idea of how risks surface in business and project planning and what companies do about it. Consider that you are the Risk Manager as you look at this case, as it will be a good exercise for the time when you will be that Risk Manager!

Any type of project should be accepted if the NPV is positive and rejected if it is negative.

When implementing project 1, you face technical and market risk. How would you assess the risks embedded in Project 1?

Many risks are interrelated. Analyze the following compound risk: Unstable requirements with tight budget will likely cancel the project. Discuss the dependencies that exist between the two risks.

We should accept the project because of the positive NPV and high IRR. We will gain $532 million in wealth which is a big money on the scale like this. The company has a bond rating of AA that makes the risk relatively low. So we should definitely say yes.

Harris Seafood should make an investment on the new shrimp plant because the NPV of the Project >0.

According to CAPM, which measurement of a project’s risk is relevant? What complications does reality introduce into the CAPM view of risk, and what does that mean for our view of the relevant measure of a project’s risk?

Calculate the effect that a revision of its cost of capital will have on the Lal Plr project’s NPV. Comment on the results.

4. Based on the information provided in the case, our group calculated the NPV for the project under both tax environment and tax-free condition, respectively, by using the excel spreadsheet and the NPV function. (For a detailed calculation of NPV, please refer to Appendix Under 15-yr.) According to our calculation, we have the following results: In the first case scenario, which the firm is in a tax environment (35% income tax), the NPV of the project equals to -$6,366,054.53

Risk allocation is performed as part of the development of the project structure, which takes into account the distribution of responsibilities and risks during the planning, construction, financing and operating phases (Corner, 2006). The aim is to identify an efficient and effective structure that optimises the costs of the project and ensures that the risk occurrences do not damage the project (Delmon, 2009). According to Grimsey and Lewis (2007) risk allocation has two elements: optimal risk management and value for money. The first implies that the

After reviewing the project management student group request, a risk assessment was used to determine all of the projects risks and constraints. One of the main project constraints is the lack of budgeting; the project was allotted no budget to get the ball rolling and no budget to keep the program running. Without a solid number for a budget, the project manager will be

NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also

* negative, the benefits are not large enough to cover all three, and therefore the project should be rejected.