Calculations Flashcards
Payback
Initial investment / return
RIO Return on Investment
((Project Value-Project Cost)/Project Cost) X 100
Total amount of interest paid
Amt borrowed X (1 + Interest)to the N power, where N is timeframe
*Subtract that Amt from Amt borrowed
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?
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.
What the project should be
worth.
Planned value (PV)
What the project is worth
Earned value (EV)
Percent complete X BAC
What the project has spent
so far
Actual Cost (AC)
What the project budget is
Budget At Completion (BAC)
The difference between
earned value and the actual
costs
Cost variance (CV)
EV (Percent Complete X BAC) -AC
Positive – under budget
Negative – over budget
The difference between
earned value and planned
value
Schedule variance (SV)
EV (Percent Complete X BAC) -PV
Positive – ahead of schedule
Negative – behind schedule
Projection of being over or
under budget based on
current performance
Variance at Completion (VAC)
BAC-EAC
Positive – under budget
Negative – over budget
Shows overall cost efficiency
on the project.
Cost Performance Index (CPI)
EV (Percent Complete X BAC)/AC
Greater than 1 – under budget
Less than 1 – over budget
Shows overall schedule
adherence
Schedule Performance Index
(SPI)
EV (Percent Complete X BAC)/PV
Greater than 1 – ahead of
schedule
Less than 1 – behind schedule
Forecasts final project
costs based on current
performance
Estimate at Completion (EAC)
Standard formula
BAC/CPI
Predict how much more the
remainder of the project will
costs
Estimate to Complete
EAC-AC
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
- 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.
Float Equation
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!
Future Value of Money
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
Present Value of Money
PV=FV/(1+i)to the n power
Net Present Value: anything greater than X is good
1
Internal Rate of Return: anything greater than X is good
0
Internal Rate of Return: anything greater than X is good
0
