Individual Report: Project Management for Apple Inc. - MBA643

This report provides a comprehensive analysis of project management practices within Apple Inc., covering key aspects such as project selection, cost management, and funding strategies. Part A of the report delves into project selection methods, emphasizing the payback period as a suitable tool for Apple's global operations, and explores cost management techniques, highlighting the importance of strict budget control and resource planning. It also examines various funding sources, with a focus on internal and external financial options, and discusses the complexities of project implementation and winding up, including technological, business process, and third-party issues. Part B of the report focuses on a capital budgeting analysis for Apple Corporation. This includes an examination of the equity capital issue, the causes for raising funds through equity, the impact on the market price of shares, and the computation of future cash flows and net present value (NPV) for a new iPhone XI project. The report concludes with a recommendation to invest in the project based on a positive NPV and discusses the funding options for this project.

PROJECT MANAGEMENT

Table of Contents
Part A...............................................................................................................................................4
Introduction......................................................................................................................................4
Project selection...........................................................................................................................4
Cost management.........................................................................................................................5
Funding........................................................................................................................................5
Implementation and winding up..................................................................................................6
Part B...............................................................................................................................................7
Issue on equity capital of Apple Company..................................................................................7
Causes for raising the funds through equity capital.....................................................................7
Impact on the market price of shares in the year 2019 in case of Apple Company....................8
Future Cash flows........................................................................................................................8
Computation of Net Present Value..............................................................................................8
Recommendation.........................................................................................................................9
Funding of this project.................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11
LIST OF TABLES
Table 1Computation of the Future Cash flows by Apple's New IPhone XI....................................8
Table 2Computation of Net Present Value......................................................................................8

PART A
INTRODUCTION
Present report emphasizes on project selection method of the company Apple Inc. Further,
recommendations have been provided to determine the best projects so that same could be
undertaken and to avoid the ineffective projects. It will be followed by recommendations on cost
management, funding, implementation, and winding up.
Project selection
Project selection is engaged with the analysis of different tools, as project engages with a
considerable amount of investment. It is to be ensured that the total cost of any main project
undertaken by the company must be lower than its total benefits resultant from the
project(Milosevic and Martinelli, 2016).
It can be stated that the tools, techniques and methods for project selection are inclusive of
variants for example benefit-cost analysis, payback period, discounted cash flow analysis, net
present value, opportunity cost, scoring models and so on. Further, it has been assessed that the
decisions of project selection are generally not left to the project manager and assistance is also
taken from individuals who are involved in project in order to reach better project selection
decisions. One of the most significant parts of the role of project management is collecting and
facilitating discussions. Therefore, it can be stated that the company must have an in-depth
understanding level for the meaningful participation in this significant process (Carstens,
Richardson, and Smith, 2016).
After analyzing all of the methods, it has been accessed that the best and most widely used
method is the payback period, which is most suitable for the purpose of project selection.
Payback period considers time calculation for the initial investment to return. This is
concentrated on how fast the money can be returned back from an investment, is an essential risk
measure (Hopkinson, 2017). Thus, the payback period is beneficial in comparing the
comparative project risks with differing payback periods. It can be reflected that the payback
period can be employed to monitor prospective investments, and it can be used in combination

with other methods of analyzing to reach a more detailed insight into the investment impact.
Since Apple is a very large company having global operations, so the payback period methods
add simplicity, so that company could no longer indulge itself in complex calculations and
transactions. The theory states that projects with short-term paybacks are highly liquid, and
thereby less risky which is good for Apple, they will allow the company to recoup the investment
as soon as possible, and further reinvestments can be made to earn more profitability and returns.
Cost management
Cost management refers to activities relating to controlling and planning of a budget of the
project (Kerzner and Kerzner, 2017). For establishing an appropriate extent of control on the
budget, the project manager of Apple Company should practice strict control over the cost
supervision. They should act conscious and careful of the allocation of funds at all time and
consider the changing aspects to meet the set budget. In addition, they must not exercise things
that go over the budget in an unexpected way. Further, a project manager must be cautious while
exercising effective cost management, and consider these few areas; actual budget, current
approved cost, predicted versus original cost and committed cost (Harrison and Lock, 2017).
For Apple, they are required to follow the four key phases of effective cost management,
namely; resource planning cost estimating, cost budgeting and cost controlling. Cost
management comprises of effective strategy implementation and offering the resources as well as
process discipline to allow and make sure that there is higher possible quality, validity and
productivity level at the minimum cost possible (Heldman, 2018). It is essential to follow up
some strategies which are offering clear and stable performance objectives, in addition, cost
manager must consider the analysis of all costs in a realistic way so that they can analyse if or if
not the budgets are according to scope and time. The strategy comprises assigning cost to various
activities, determining employee productivity so that assumption regarding ascertainment of
labour cost and wages can be done on the basis of task and time period (Sanchez and Terlizzi,
2017).
Funding
It can be said that financial sources are the main challenge which is faced by project management
for project funding. It is essential to choose the most suitable funding source, as it can create a
considerable effect on corporate financial performance. There are various financial sources

inclusive of equity, debenture, retained earnings, borrowing, credit letter, venture funding, and so
on. Based on the distinct situations, these sources are adopted by the company. The fund
selection process is engaged with a detailed analysis of every source of funding. There are two
main financial sources, which are the external financial source and internal financial
source(Tonchia, 2018).
In case when the company is willing to raise funds on internal basis, then they could go for
selling off assets, retained earnings, debt collection or in the form of reducing working capital.
This would be beneficial in a way that a company would be solely dependent on other parties to
finance them. Internal sources of finance allude to the business finance sources that are produced
in the business, from the present assets as well as activities. Shareholders have no control over
these funds. It aims to increase the cash derived from common business activities. To this note,
cost controlling and evaluation is conducted with an optimal budget review(Fleming, and
Koppelman, 2016).
In a situation where the company is willing to raise funds from the external sources, then they
would go for Financial Institutions, Preference Shares, Debenture, Lease financing, Loan from
banks, Public Deposits, Trade Credit, Factoring Commercial paper etc. External financial
sources imply capital arrangement or finance from external business sources (Raudla and et al.
2015). In this financial type, a company is required to pay the periodic based payments of the
amount of interest with the principal amount. In addition, the outer parties might practice
supervision on the business, along with this the interest payment is tax deductible, and thereby
company can take benefit of the interest payment deduction from its assessable income.
One of the best sources internal source of finance is retained earnings of the organization. In case
of Apple Inc, the specified option can be easily used as company has considerable level of
retained earnings, so it can help the company in funding its various projects liked research and
development, expansion and facility construction so on (Kerzner, 2017).
Implementation and winding up
The project implement is a very complicated task, it is engaged with various problems, the
particular issues that Apple might consider before commencing a project are namely
technological problems which are related with technical issues, business process issues

concerning the problems in design of the project, issues in change management which are prone
to environmental, consumer and business changes, resource issues which can come in form
equipment, employees and materials, and third party issues related with the suppliers and
vendors. These issues are required to be considered in significant manner, as without these
company would not be able to keep the project on track as it relates to resources, business
process, technological access and third party access regarding project (Turner, 2016).
The issues can impact varying from business to end customers, as it can create technical failure,
shortage in material, these might all create an adverse impact, and the risks are created with
unnecessary conflicts, failures and delays.
Projects are wound up when the ultimate goal of the project is achieved in the best interest.
Similarly, project manager determines the cost of removal and ensures that there is sufficient
benefit gained from the project.
Projects does not end up simply; as infrastructure and resources considerations are to be
assessed in order to apply them in optimum manner. It is also essential that there is consideration
of appropriate infrastructure related to the effective storage of data and networks (Oluikpe,
2015). Indeed, there are environmental concerns related to to the project, so it is very significant
for a project manager to consider environmental friendly aspects, full deployment of waste
materials, proper recycling, and so on.
PART B
The issue on equity capital of Apple Company
Equity capital issue of Apple Inc is $ 40201 million as on 29th September 2018. (Apple Inc.
(AAPL). Financials, 2019.)
Causes for raising funds through equity capital
The company can raise funds through several sources of finance, and equity finance is one of
them. The reason behind for raising funds through the sale of equity shares or issue of equity
shares is that it is free from any burden. In other words, it can be said that no repayment is
required to be done in future as well as adequate funds can be raised through equity financing

(Kandilov, Leblebicioğlu, and Petkova, 2017). Along with this, if the company suffers from any
loss, then return in the form of a dividend to the equity shareholders is not required by the
company. Therefore, as per above discussion company can raise funds through equity capital
(Balaban, Župljanin, and Ivanović, 2016).
Impact on the market price of shares in the year 2019 in case of Apple Company
In the year 2019, the share price of the Apple Company has been reduced in comparison with
price of share of previous year. The main reason behind decrease in price of shares is non-
satisfaction of investors with the performance of the company. Along with this tension by the
investors, high rate of interest, inflation rates, rates fluctuation in the currency are other reason
for such reduction in the share price of the company (Spence, 2019).
Future Cash flows
Table 1Computation of the Future Cash flows by Apple's New iPhone XI
Ye
ar
Initial
Expend
iture
cas
h
infl
ow
fro
m
the
sale
of
iPh
one
XI
Vari
able
Cost
Loss
of
Reve
nue
from
existi
ng
prod
uct
Depreci
ation
Net
Reve
nue
Ta
x
@
30
%
Pro
fit
aft
er
tax
Depreci
ation
Infl
ows
of
salv
age
valu
e
Wor
king
Capit
al
Fut
ure
cas
h
flo
ws
0 -5 -5 -5 -0.03
-
5.0
3
1 2.8 0.56 1 1 0.24
0.0
72
0.1
68 1
1.1
68
2 2.8 0.56 1 1 0.24
0.0
72
0.1
68 1
1.1
68
3 2.8 0.56 1 1 0.24
0.0
72
0.1
68 1
1.1
68
4 2.8 0.56 1 1 0.24
0.0
72
0.1
68 1 2 0.03
3.1
98

Computation of Net Present Value
Table 2Computation of Net Present Value
Year
Future cash
flows Present Value factor 10% Present Value
0 -5.03 1 -5.03
1 1.168 0.91 1.06
2 1.168 0.83 0.97
3 1.168 0.75 0.88
4 3.198 0.68 2.17
Net Present Value 0.05
Recommendation
By considering the above future cash flows and the net present value of the project, it has been
observed that Apple Company can generate the positive cash flows from the investment in the
New XI phone. Since the NPV of the project is positive. Therefore it is recommended that the
company should make the investment in this project (Chittenden, and Derregia, 2015).
Funding for this project
It is not always essential that funding of this project by the issue of ordinary shares is the
cheapest source of finance. In case the investors expected that the performance of the company
would improvise in the future, then there is a possibility that equity source of financing may be
cheaper in comparison with other sources of financing. However, the tax benefit on the payment
of distribution of the dividend is not available to the company; therefore, it may be an expensive
source of financing. However, for the Apple Company, it is the cheapest source of financing
because every person is interested in obtaining the ownership of the company.
Further, if the company could finance only by the bonds, then it could definitely make the impact
on the NPV. Since the bonds require the payment of interest, which reduce the profit of the
company, and it leads to a reduction in the NPV (Abor, 2017).
CONCLUSION
A concluding remark can be made that, Apple for project selection should choose the payback
period method, as it is an effectual investment risk measure. It effectively determines the total

time needed for the cash flows from a project for paying back the initial investment within the
project. Along with this, in terms of cost management, project managers of the company must
consider appropriate planning, cost allotment, goal setting, budgeting and scheduling to complete
the project at a determined cost. Thus, in context with funding, Apple must opt for retained
earnings of internal sources of finance it is because it eases the cost of financing, avoids the
unnecessary control of shareholders, and facilitates stable dividends and financial stability.
Lastly, in terms of implementation and winding up , it is extremely important to consider related
issues, impacts and problems with the initiation to end of projects so that appropriate risk
management framework is applied and uncertainty is avoided.

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