swer all questions Question 1 (5 pointsl: Select the best correct answer I. If t
ID: 2657362 • Letter: S
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swer all questions Question 1 (5 pointsl: Select the best correct answer I. If the internal rate of return for a given project is 1 1%, the net present worth for this project at an interest rate of 9%: A. Will be a negative value B. will be a positive value C. Can be a negative or a positive value D. None of the above is correct 2. The main focus of the "bottom-up" estimating approach is to estimate cost elements A. At the higher levels of the WBS cost structure, which are then added together B. At the lower levels of the WBS cost structure, which are then added together C. At the lower levels of the WBS cost structure, which are then added together D. At the higher levels of the WBS cost structure, which are then added together to obtain the total cost of the product/project and, therefore, determine what should the product cost to obtain the total cost of the product/project and, therefore, determine what should the product cost to obtain the total cost of the product/project and, therefore, determine what does the product cost to obtain the total cost of the product/project and, therefore, determine what does the product cost 3. Selecting the project that maximizes the B/C ratio: A. Guarantees that the selected project is the most profitable one B. Guarantees that the best project is selected not guarantee that the best project is selected D. Indicates that the incremental B/C ratio for this project as compared to all other projects will be higher than one 4. As the estimate becomes more detailed: A. The estimate becomes less accurate and the cost of estimating increases B. The estimate becomes less accurate and the cost of estimating decreases C. The D. The accuracy of the estimate improves and the cost of estimating increases accuracy of the estimate improves and the cost of estimating decreases 5. The objective of value engineering is to try to meet the product's target cost A. Reducing the manufacturing costs while maintaining the required product B. Reducing the manufacturing costs to be less than the target cost calculated C. Reducing the manufacturing costs to be less than the selling price of b functions from the selling price of best competitor competitor D. All the aboveExplanation / Answer
1. (b) - NPV will be positive
2. (c)
3. (c)
4. (d)
5. (a)
6. Annual mileage = 30,000 km and cost per gallon = 2.5; Average mileage per gallon = 50. Hence for 30,000 km, the fuel required = (30000/50) = 600 gallons which will cost $1500 dollars.
At estimated 10% improvement, the average mileage per gallon will be = 55. Fuel required per annum = 30000/55 = 545.45 gallons and cost will be $1363.64.
Hence annual savings = (1500-1363.64) = 136.36
The motorist can save $136.36 per annum for 10 years. This is like an annuity and motorist should be willling to pay the present value of this annuity (at 10% rate given for him) as cost of the new system.
PV of annuity = Periodic Cash flows * [1 - (1+r)-t] / r ; where r is the discount rate (10% here) and t is the time period (10 years) here.
PV = 136.36 * [1-(1+10%)-10]/10% = 837.87
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