PMAN 650

PMAN 650
Final Exam
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Multiple choice 5 points each
1. An integrated project management approach is one that:
a. Develops new products with the use of multi-functional teams
b. Exposes the front-loading of baselines
c. Allows the project to equate the defined scope with authorized resources, both

within the master schedule
d. Focuses on performance that falls outside of a predetermined baseline

2. The three dimensions of performance in Earned Value Project Management are:
a. Actual Cost, Earned Value, and Schedule Variance
b. Actual Cost, Earned Value, and Planned Value
c. Actual Cost, Planned Value, and Scheduled Variance
d. Cost Variance, Planned Value, and Schedule Variance

3. At some point in the life of a project, the project manager determined the following data

on a $1,250,000 authorized budget project: amount of earned value $350,000. At that
point, the value of the planned work was $750,000, and actual cost was $750,000. Based
on this information, the Schedule Performance Index for this project was:
a.

0.28

b.

0.47

c.

0.53

d.

0.60

PMAN 650
Final Exam
4. Using the data provided in Question No. 3 above, and assuming a linear cost function, the

project manager can estimate that actual cost of the project would be closest to (figures
rounded to nearest hundred thousand):
a.

$4,500,000

b.

$2,700,000

c.

$2,400,000

d.

$2,100,000

5. Using Earned Value Management in projects, multi-functional control account plans

should have:
a.i.a.

A Precise Scope of work, a Schedule, a Budget, and a CAP Manager

A point of Management control from WBS, Homogenous Work scope,
Multiple Functions, and Earned Value Performance Measured
a.i.b.

Organizational Breakdown Structure, Work Breakdown Structure, Control
Account Plans, and Points of Management Control
a.i.c.

Exercises 25 points each
6. Project is to produce 200 widgets and is scheduled to take five weeks. Each unit

is planned to cost $90. The project is severely cost constrained. Performance data for the
project at the end of week three is presented below:


120 total units were planned to be produced



130 units have actually been produced


The financial manager reported that the business had actually spent $13,000 on
the project by the end of week three.

Answer the following questions; show all work:
a. Quantify cost variance. Is the project ahead or behind budget?
b. Quantify schedule variance. Is the project ahead or behind schedule?
c. Quantify cost performance efficiency. Is the project performing better or worse

than planned?

PMAN 650
Final Exam
d. Quantify schedule performance efficiency. Is the project performing better or

worse than planned?
e. What is the forecast of project cost at completion assuming current cost

performance efficiency remains the same? How much budget variance is expected
at completion?
f.

What is the forecast of funding needed to complete the project (from this point
forward)?

g. What cost performance efficiency would be required for the remainder of the

project to complete the project within the original budget?
h. As the project financial manager, what recommendations would you make?

7. Proust Manufacturing Co. produces personal fitness machines. The once successful line is

no longer selling well, so the company is considering production of a new improved
cardio-vascular machine. This can be done by buying needed production equipment. The
after tax cash flow for buying this equipment is $700,000, at the beginning of Year 0. The
alternative to produce the same output, is to lease that same equipment through four equal
payments of $185,000 each year paid at the beginning of the year. The required rate of
return (hurdle rate) for this business is 12 percent. Assume no taxes. Revenue from sales
of the new cardiovascular machines is expected to be:


Year 1 - $375,000



Year 2 $250,000



Year 3 $140,000



Year 4 $75,000

Calculate the net present value of both the new purchase option and the lease option.
Show all work. Determine the best option for Proust and justify your answer. (20 pts.)

8. This question is based on the information provided in the abbreviated year-end Income

Statement and abbreviated year-end Balance Sheet for NMC Corporation shown below.

PMAN 650
Final Exam

PMAN 650
Final Exam
NMC Corporation Income
Statement for the Calendar
Year (January 1 - December
31)

Thousands of dollars
(except stock price,
earnings per share, and
dividends per share)

Net sales

$3000

Cost and expenses:

$2734

EBIT

$266

Less interest expense:

$66

Earnings before taxes

$200

Taxes

$80

Net income before preferred
dividends
Dividends to preferred
stockholders

$120
$8

Net income available to
common stock holders

$112

Per share common stock:
Stock Price

$26.50

Earnings per share

$2.24

Dividends per share

$1.84

NMC Corporation
Balance Sheet
(Average of
beginning and end of
year)
Cash
Market securities

Assets
(thousands
of dollars)
$50 Accounts payable
$0 Notes payable

Liabilities
and Equity
(thousands
of dollars)
$60
$100

PMAN 650
Final Exam
Accounts receivable

$350 Accrued Wages

$10

Inventories

$300 Accrued Taxes

$130

Total Current Assets:

$700 Total Current Liabilities:

$300

Net plant and
equipment:

$1300 Total Long Term Debt:

$800

Total Stock Holders
Equity:
Total Assets:

$2000

$900

Total liabilities and
equity:

$2000

8a. Calculate the NMC financial ratios contained in the following table

Financial Ratios

NMC Values

Industry
Values

Current Ratio

2.5 times

Quick (Acid) Ratio

1.0 times

Total Debt to Total Assets

40%

Return on Assets (ROA)

9%

Price/Earnings Ratio

12.5 times

8b. Compare your results to the industry ratios and describe what NMC should do to improve
its position in the market.