PMAN650 Final Exam

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Dated: 25th Nov'19 06:09 PM
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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


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

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

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

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 haveactually 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?

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 tolease 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.



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


Cost and expenses:




Less interest expense:


Earnings before taxes




Net income before preferred dividends


Dividends to preferred stockholders


Net income available to common stock holders


Per share common stock:


Stock Price


Earnings per share


Dividends per share





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

Assets(thousands of dollars)


Liabilities and Equity(thousands of dollars)



Accounts payable


Market securities


Notes payable


Accounts receivable


Accrued Wages




Accrued Taxes


Total Current Assets:


Total Current Liabilities:


Net plant and equipment:


Total Long Term Debt:




Total Stock Holder’s Equity:


Total Assets:


Total liabilities and equity:



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



Return on Assets (ROA)



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.

Solution - PMAN650 Final Exam
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Preview of PMAN650-Final-Exam.xlsx
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Preview of PMAN650-Final-Exam-Answer.docx
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