- The first project is a process optimization which would result in a cost reduction of $120,000 per year.This benefit would be achieved immediately after the end of the project.
- The second project would be the development of a new product which could produce the following net profits after the end of the project:
| 1 |
year: |
$ 15,000 |
| 2 |
year: |
$ 125,000 |
| 3 |
year: |
$ 220,00 |
Assumed is a discount rate of 5 % per year.Looking at the present values of these projects’ revenues in the first 3 years, what is true?
A. Both projects are equally attractive.
B. The first project is more attractive by app.7%.
C. The second project is more attractive by app.5%.
D. The first project is more attractive by app.3%.
answer => D
Comment (1)
- The first project is a process optimization which would result in a cost reduction of $120,000 per year. This benefit would be achieved immediately after the end of the project.
- The second project would be the development of a new product which could produce the following net profits after the end of the project:
| 1. year: |
$ |
15,000 |
| 2. year: |
$ |
125,000 |
| 3. year: |
$ |
220,000 |
Assumed is a discount rate of 5% per year. Looking at the present values of these projects’ benefits in the first 3 years, what is true?
A. Both projects are equally attractive.
B. The first project is more attractive by app. 7%.
C. The second project is more attractive by app. 5%.
D. The first project is more attractive by app. 3%.
answer => D
Comments (3)
A. Present Value = Future Value/(1+R)
B. Present Value = Future Value/(1-R)
C. Present Value = (1+R)
D. Present Value = (1-R)n / Future Value
answer => A
Comments (4)
A. You are only progressing at 86% of the rate originally planned
B. You are progressing at 125% of the rate originally planned
C. You are progressing at 116% of the rate originally planned
D. You are only progressing at 80% of the rate originally planned
answer => D
Comment (1)
A. NPV
B. Benefit cost ratio
C. Payback period
D. Law of diminishing returns
answer => D
Comments (2)
A. 227.3
B. 250
C. 274.7
D. 525
answer => C
Comments (3)
A. The EAC is a positive number, which means the project will finish under budget.
B. You do not have enough information to calculate CPI.
C. The CV is a negative number in this case, which means you’ve spent less than you planned to spend as of the measurement date.
D. The CV is a positive number in this case, which means you’re under budget as of the measurement date.
answer => D
Comments (2)
A. 1.25
B. .66
C. .80
D. 1.33
answer => D
Comment (1)
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