ASSIGNMENT

QUESTION ONE
Fill in the gap:
1) A__________ identifies the stage of completion of each task
has attained by a specified date within the project.
2) Earned value management allows a project manager to
monitor the project's __________, __________, and
__________.
3) __________ is the time by which an activity can occur.
4) The budgeted cost of the work that has been performed to
date is the __________.
5) The __________index allows the project manager to calculate
the project's budget to completion.
6) __________ is the time which an activity must occur if the
overall project time is to be achieved.
7) Earned value management is also known as __________.
8) __________ should be developed with an understanding of the
required tasks, task duration, and task prerequisites.
9) __________ is a strategy used to correct resource over-
allocations by some combination of delaying or splitting tasks.
10) __________ for a project is that sequence of dependent
tasks that have the largest sum of most likely durations.
QUESTION TWO
Choose the best answer:
1) Congener Beverage Corporation is considering an investment
in a capital budgeting project that has an internal rate of return
of 20%. The only cash outflow for this project is the initial
investment. The project is estimated to have an 8 year life and no
salvage value. Cash inflows from this project are expected to be
$100,000 per year in each of the 8 years. Congener's discount
rate is 16%. What is the net present value of this project?
(Ignore income taxes)
a) $5,215
b) $15,464
c) $50,700
d) $55,831
2) Which of the following establishes a project start date and then
schedules forward from that date?
a) end scheduling
b) remote scheduling
c) forward scheduling
d) reverse scheduling
e) none of these
3)Which of the following establishes a project deadline and then
schedules backward from that date?
a) end scheduling
b) remote scheduling
c) reverse scheduling
d) forward scheduling
e) none of these
4) Which of the following statements is correct?
a) If the IRR of a project is 0%, its NPV, using a discount rate,
k, greater than 0, will be 0.
b) If the PI of a project is less than 1, its NPV should be less
than 0.
c) If the IRR of a project is greater than the discount rate, k,
its PI will be less than 1 and its NPV will be greater than 0.
d) If the NPV of a project is greater than 0, its PI will equal 0.

5) Two mutually exclusive investment proposals have "scale
differences" (i.e., the cost of the projects differs). Ranking these
projects on the basis of IRR, NPV, and PI methods give
contradictory results.
a) will never
b) will always
c) may
d) will generally

6) According to the reinvestment assumption, which method of
capital budgeting assumes cash flows are reinvested at the
projects rate of return?
a) Payback period
b) Net present value
c) Internal rate of return
d) None of the above
7) Under the net present value method:
a) the interest rate is determined that equates inflows and
outflows
b) the time value of money is not taken into account
c) inflows are discounted back to determine if they exceed
outflows
d) the basic discount rate is the internal rate of return

8) The basic discount rate used in net present value analysis is:
a) the internal rate of return
b) the cost of common equity
c) the net discount rate
d) the cost of capital to the firm
9) Amster Corporation has not yet decided on the required rate
of return to use in its capital budgeting. This lack of information
will prevent Amster from calculating a project's:
Payback Net Present
Value
Internal
Rate of
Return
a) No No No
b) Yes Yes Yes
c) No Yes Yes
d) No Yes No
10) In earned value management analysis, the cumulative
amount of the budget becomes the:
a) Planned value.
b) Scheduled value.
c) Earned value.
d) Actual cost.

11) A very useful tool for managing schedule and cost is:
a) Resource leveling chart
b) Earned Value Management
c) Gantt chart
d) Schedule and cost allocation

12) A planned undertaking of related activities to reach an
objective that has a beginning and an end best defines:
a) Gantt chart.
b) Activity plan.
c) Project.
d) Task schedule.
e) CPM/PERT Networks.

13) A critical path refers to:
a) A sequence of task activities whose order and durations
indirectly affect the completion date of a project.
b) A sequence of task activities whose order and durations
directly affect the completion date of a project.
c) A sequence of task activities whose order must be
performed in parallel.
d) A sequence of task activities whose duration cannot last
more than 40 percent of the time allotted to the project.
e) None of the above.

14) Please refer to the table given below which shows the time
estimates for different tasks:


If task 1 2 takes 2 months more than what was earlier
planned, the impact on the project will be:
a) The duration of the project will increase by 1 month
b) The risk in the project will increase
c) The duration of the project will increase by 2 months
d) The project float will increase by 2 months
15) A profitability index of .85 for a project means that:
a) The present value of benefits is 85% greater than the
project's costs.
b) The project's NPV is greater than zero.
c) The project returns 85 cents in present value for each
current dollar invested.
d) The payback period is less than one year.

16) Which of the following is not a necessary input to cost
budgeting
a) Cost estimates.
b) Work breakdown structure.
c) Project schedule.
d) Progress report.
17) Resource leveling of a project schedule
a) Will generally increase the project completion date.
b) Will always increase cost.
c) Will generally decrease the project completion date.
d) Will reduce overtime.
18) The measure used to forecast project cost at completion is:
a) CPI
b) SPI
c) BCWP
d) ACWP
19) Effective stakeholder management includes all of the
following project elements EXCEPT:
a) Clear requirements definition.
b) Scope change control.
c) Timely status information.
d) Frequent cost reports.
20) You are the project manager and responsible for quality
audit. You have been accused for being a fanatic because of your
practice of conducting not one, but multiple, quality audit on a
project a project. Which one of the following types of audits is not
an example of a quality audit?
a) Internal.
b) Scope.
c) Baseline.
d) Systems.

QUESTION THREE
True or False:
1. Depreciation expenses involve no direct cash outlay and can be
safely ignored in investment-project evaluation.
2. The IRR method can tend to understate (decrease) the relative
attractiveness of superior investment projects when the
opportunity cost of cash flows is below the IRR.
3. When NPV = 0, the IRR exceeds the cost of capital.
4. Depreciation is included as a cash flow in capital budgeting
decisions to ensure that the original cost of the asset is fully
recovered.
5. The present value of a given future cash flow will increase as
the discount rate decreases.
6. The accounting rate of return method ignores the time value of
money effect.
7. A project is acceptable if the total present value of its expected
cash inflows exceeds the total of the present values of the
amount to be invested plus the salvage value of the investment.
8. The earned value of a project is the cumulative total costs
incurred in accomplishing the various work packages.