Question: 1. Consider an activity A in a project network. A simulation run of 15,000 results in two tornado diagrams -one for Total Project Cost and one for Total Project Duration. In the 1st tornado diagram, A is at the top while in the 2nd tornado diagram, it is at the bottom. What does that mean?
2. The management of ABC Inc. is considering two projects A and B. They want to select one of these projects based on 1 year data. Project A would require investment of $50,000 (negative cash flow) and yield revenues of $15,000; $25,000 and $32,000 in High, Medium and Low favorable economic conditions. Project B would require investment of $30,000 (negative cash flow) and yield revenues of $10,000; $10,000 and $50,000 in High, Medium and Low favorable economic conditions. Experts have rated the chances of High, Medium and Low favorable economic conditions to be .3; .5; and .2 respectively. What are the EMVs of each project? Which project would you select? (Neglect any time of money).