Calculations

Question 1

Payback

Answer 1

Initial investment / return

Question 2

RIO Return on Investment

Answer 2

((Project Value-Project Cost)/Project Cost) X 100

Question 3

Total amount of interest paid

Answer 3

Amt borrowed X (1 + Interest)to the N power, where N is timeframe
*Subtract that Amt from Amt borrowed

Question 4

Your project will cost $80,000. The finance department estimates revenues the next three years to be: $20,000, $35,000, and $66,000. If the current interest rate is 5%, what is the estimated NPV for your project?

Answer 4

Year 1: $20,000 / 1.05 = $19,047.62;
Year 2: $35,000 / 1.10 = $31,818.18;
Year 3: $66,000 / 1.16 = $56, 896.55;
Total Cash Inflows: $19,047.62+$31,818.18+$56, 896.55 = $107,762.35;
$107,762.35 - $80,000 = $27,762.35.

Question 5

What the project should be
worth.

Answer 5

Planned value (PV)

Question 6

What the project is worth

Answer 6

Earned value (EV)
Percent complete X BAC

Question 7

What the project has spent
so far

Answer 7

Actual Cost (AC)

Question 8

What the project budget is

Answer 8

Budget At Completion (BAC)

Question 9

The difference between
earned value and the actual
costs

Answer 9

Cost variance (CV)
EV (Percent Complete X BAC) -AC

Positive – under budget
Negative – over budget

Question 10

The difference between
earned value and planned
value

Answer 10

Schedule variance (SV)
EV (Percent Complete X BAC) -PV

Positive – ahead of schedule
Negative – behind schedule

Question 11

Projection of being over or
under budget based on
current performance

Answer 11

Variance at Completion (VAC)
BAC-EAC

Positive – under budget
Negative – over budget

Question 12

Shows overall cost efficiency
on the project.

Answer 12

Cost Performance Index (CPI)
EV (Percent Complete X BAC)/AC

Greater than 1 – under budget
Less than 1 – over budget

Question 13

Shows overall schedule
adherence

Answer 13

Schedule Performance Index
(SPI)
EV (Percent Complete X BAC)/PV

Greater than 1 – ahead of
schedule
Less than 1 – behind schedule

Question 14

Forecasts final project
costs based on current
performance

Answer 14

Estimate at Completion (EAC)
Standard formula

BAC/CPI

Question 15

Predict how much more the
remainder of the project will
costs

Answer 15

Estimate to Complete

EAC-AC

Question 16

What does the standard deviation tell about a data set?
1. The mean of the population in the way it relates to the medium
2. The upper and lower spec limits of the population
3. The range of data points for the population
4. How diverse the population is

Answer 16

4. How diverse the pollution is

The standard deviation is calculated by averaging all the data points to find out the mean. The average of how far each individual point is from that mean. Hence for a diverse population, a higher standard deviation will be there and vice-versa. Hence, standard deviation measures how diverse the population is.

Question 17

Float Equation

Answer 17

Slack/Float = LS – ES or LF – EF

If Float = 0, then the activity is on the critical path
If Float < 0, then the activity is Behind Schedule!

Question 18

Future Value of Money

Answer 18

 FV Future value=PV Present value(1+interest rate/rate of return)to the n power n is # of time periods
 Example: PV is 100,000, I is .06, n is 5 years
 FV=100,000(1.06)5th power
* FV=133,822.60

Question 19

Present Value of Money

Answer 19

PV=FV/(1+i)to the n power

Question 20

Net Present Value: anything greater than X is good

Answer 20

1

Question 21

Internal Rate of Return: anything greater than X is good

Answer 21

0

Question 22

Internal Rate of Return: anything greater than X is good

Answer 22

0