#### Feedback

The planned value as of day two is $275.00 Obtain this value by adding the planned value (PV) of Activity A ($200) and B ($75), which should have been done as of day two on the project. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 2

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This type of cost typically increases for every server and is not likely associated with a specific project. Therefore, variable indirect is the best description. Variable is not the best answer. Fixed and fixed direct cost descriptions don’t fit this type of cost except in one instance: If the question had limited the server upgrades to a fixed license fee for a web server used in a web project, the answer would have been (C) Fixed. [Crosswind Manual 7.1; No PMBOK® Guide Reference]

### Question 3

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Project B is the most attractive project because it has the highest dollar amount. The years listed with the NPV are distracters because they are already factored into the dollar amount of the project. Project A and C are of less value than Project B. [Crosswind Manual 7.2; No PMBOK® Guide Reference]

### Question 4

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Project C has a negative BCR because it is creating less revenue than the cost. Project A and B have positive financials. Project D appears to have some issues, but we don’t know enough about it to determine anything else. [Crosswind Manual 7.2; No PMBOK® Guide Reference]

### Question 5

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The BCR is the benefit cost ratio. It considers the benefit (or revenue) and cost of an initiative. It doesn’t factor in profit or profit margin. [Crosswind Manual 7.2; No PMBOK® Guide Reference]

### Question 6

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Earned value deals with scope, schedule, and cost. Actual cost (AC) shows cost. Planned value (PV) shows time. Earned value (EV) shows scope. The formulas that work with these three variables show how the three are interacting together. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 7

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Sunk cost is one that has already been spent on the project. It shouldn’t be taken into consideration when determining whether to continue on the project. There is nothing in the situation about phasing the project. The budgeted cost of work performed is the earned value (EV). Opportunity cost doesn’t apply here. [Crosswind Manual 7.5; No PMBOK® Guide Reference]

### Question 8

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Estimate Costs obtains an approximation of the resource costs for activities or work packages. Determine Budget sums the costs to the individual work packages or activities to establish an authorized cost baseline. Control Costs manages the cost of the project. Analogous estimating is a distracter. [Crosswind Manual 7.11; PMBOK® Guide 7.2]

### Question 9

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To calculate this value, determine a few values first. What is the value of the asset at the end of the schedule? What is the amount of the asset to begin with? What is the number of years of the depreciation schedule? First, subtract the ending value of the asset from the beginning value of the asset ($25K – $0 = $25K). The $25K is then divided by the years (5) of the depreciation schedule. This calculation results in $5K per year of depreciation. [Crosswind Manual 7.6.1; No PMBOK® Guide Reference]

### Question 10

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Double declining balance and sum of the digits are both examples of accelerated depreciation. DDB is not standard depreciation. The other answers are distracters. [Crosswind Manual 7.6.2; No PMBOK® Guide Reference]

### Question 11

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The to-complete performance index (TCPI) shows the efficiency needed of the remaining resources to come in on budget. Cost variance (CV) shows the difference between work done and what was paid for it. Cost performance index (CPI) shows the ratio between the work done and what was paid for it. The estimate to complete (ETC) shows the amount remaining to be spent based on the current spending efficiency (CPI). [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 12

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The chart of accounts sets up codes that will be used to track project cost. The other answers are distracters. [Crosswind Manual 7.13.1; No PMBOK® Guide Reference]

### Question 13

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The weighted milestone approach is ideal when an activity is over two reporting periods in length. Fixed formula uses a partial credit approach such as 50/50 and is ideal when an activity is short, such as two or less reporting periods long. Earned value shows the status of the scope, schedule, and cost of the project. Forecast reporting focuses on what is getting ready to be done on the project. [Crosswind Manual 7.9; PMBOK® Guide Glossary]

### Question 14

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Fixed formula uses a partial credit approach such as 50/50 and is ideal when an activity is short, such as two or less reporting periods long. The weighted milestone approach is ideal when an activity is over two reporting periods in length. Earned value shows the status of the scope, time, and cost of the project. Forecast reporting focuses on what is getting ready to be done on the project. [Crosswind Manual 7.8; No PMBOK® Guide Reference]

### Question 15

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The data communication line is a direct cost. It is something purchased directly for the project. It is not an indirect or variable cost. [Crosswind Manual 7.1; No PMBOK® Guide Reference]

### Question 16

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Life cycle costing looks at the long-term cost of something, instead of simply what it costs to create it. This can increase project cost but in the long run save the owner of the system money. The other answers are distracters. [Crosswind Manual 7.7; No PMBOK® Guide Reference]

### Question 17

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The range of a rough order of magnitude (ROM) estimate is -25% to +75%. The other answers are distracters. [Crosswind Manual 7.12; PMBOK® Guide 7.2]

### Question 18

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The 30%/70% rule is an example of fixed formula progress reporting. It means that when the activity starts, it is given a 30% complete status and will not receive the remaining 70% until it is fully complete. PV x percentage complete of each activity is the formula for earned value. The other answers are distracters. [Crosswind Manual 7.8; No PMBOK® Guide Reference]

### Question 19

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The schedule performance index (SPI) tells you if you are ahead of, on, or behind schedule. An index less than 1.0 means you are having schedule problems. An index of 1.0 means you are doing exactly as planned on the schedule. An index greater than 1.0 means you are progressing faster than planned. The cost performance index (CPI) shows the spending efficiency of the project. The budget at completion (BAC) is the overall budget estimate for the project. The cost variance (CV) shows the amount that the project is over or under budget. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 20

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The schedule performance index (SPI) shows the rate at which the schedule is progressing. The SPI is established by showing the ratio between work done, also known as earned value (EV) and work scheduled, also known as planned value (PV). The schedule variance (SV) is the difference between work done, also known as earned value (EV) and work scheduled, also known as planned value (PV). The Gantt chart shows the schedule of the project. A variance report shows the difference between two items being measured. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 21

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Estimate to complete (ETC) shows the remaining amount to be spent on a project based on spending efficiency. This value is the difference between actual cost (AC) and estimate at completion (EAC). Estimate at completion (EAC) is a forecast of total project cost, based on spending efficiency. Cost variance (CV) is the difference between the amount of work done and what was paid for it. Budget remaining is a distracter. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 22

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Determine Budget applies costs from the individual work packages or activities to establish an authorized cost baseline. This could be at a summary or detailed level depending on the needs of the project at the time. Estimate Costs approximates the costs needed to complete project activities. Control Costs manages the cost of the project. Earned value management is a distracter. [Crosswind Manual 7.13; PMBOK® Guide 7.3]

### Question 23

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The formula for calculating the CPI (cost performance index) is CPI = EV / AC. In this instance three steps are required. First, determine the BAC (budget at completion), which is the sum of all PV (planned value): $1,500 per day cost multiplied by five days equals a BAC of $7,500. Second, calculate the EV (earned value) by multiplying the BAC by the percentage complete: $7,500 BAC multiplied by 30% complete equals an EV of $2,250. Third, calculate the CPI by dividing the EV by the AC (actual cost): $2,250 EV divided by $5,000 AC equals a CPI of 0.45. Note that planned value is defined as the work that should have been completed to date or during a particular time period (in this case, through day five of the project since the percentage complete relates to the overall project.) [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 24

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The total value of the project is the equivalent of the project budget or the BAC (budget at completion). To determine the BAC multiply the cost per day times the number of days the project is scheduled to take: $1,500 per day cost multiplied by five days equals a BAC of $7,500. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 25

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The formula for calculating the EV (earned value) is EV equals percentage complete of each activity (or in this case the entire project) multiplied by BAC (budget at completion). In this instance, two steps are required. First, determine the BAC for the project: $1,500 per day cost multiplied by five days equals a BAC of $7,500. Second, calculate the EV by multiplying the BAC by

the percentage complete: $7,500 BAC multiplied by 30% complete equals an EV of $2,250. Note that planned value is defined as the work that should have been completed to date or during a particular time period. In this case, the time period is defined as “through day five of the project,” since the percentage complete relates to the overall project. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 26

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To determine the PV (planned value) for the days already worked, multiply the cost per day by the number of days worked: $1,500 multiplied by three days equals $4,500. Note that planned value is defined as the work that should have been completed either to date or during a particular time period (in this case, to date through day three). [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 27

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The formula for calculating the ETC (estimate to complete) is ETC = EAC – AC. In this instance five steps are required. First, determine the BAC (budget at completion) by multiplying the cost per day by the number of days it will take to complete the project: $1,500 x 5 = a BAC of $7,500. Second, calculate the EV (earned value) by multiplying the BAC by the percentage complete: $7,500 BAC x 30% complete = an EV of $2,250. Third, calculate the CPI (cost performance index) by dividing the EV by the AC (actual cost): $2,250 EV divided by $5,000 AC = a CPI of .45. Fourth, calculate the EAC (estimate at completion) by dividing the BAC by the CPI: $7,500 / .45 = $16,666.67. Fifth, subtract the AC from the EAC: $16,666.67 – $5,000 = $11,666.67. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 28

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The formula for calculating the EAC (estimate at completion) is EAC = BAC / CPI. In this instance four steps are required. First, determine the BAC (budget at completion) by multiplying the cost per day by the number of days it will take to complete the project: $1,500 x 5 = $7,500. Second, calculate the EV (earned value) by multiplying the BAC by the percentage complete: $7,500 x 30% = $2,250. Third, calculate the CPI (cost performance index) by dividing the EV by the AC (actual cost): $2,250 / $5,000 AC = .45. Fourth, calculate the EAC by dividing the BAC by the CPI: $7,500 / .45 = $16,666.67. [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 29

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The formula for calculating the SPI (schedule performance index) is SPI = EV / PV. In this instance three steps are required. First, determine the PV (planned value): $1,500 per day cost multiplied by three days equals a PV of $4,500. Second, calculate the EV (earned value) by multiplying the BAC (budget at completion), since the percentage complete refers to the entire project, by the percentage complete: $7,500 x 30% = $2,250. Third, calculate the SPI by dividing the EV by the PV: $2,250 / $4,500 = 0.5. Note that planned value is defined as the work that should have been completed to date or during a particular time period (in this case, through day three of the project). [Crosswind Manual 7.14.1; PMBOK® Guide 7.4.2.2]

### Question 30

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To calculate future value (FV), you need to have a present value (PV), an interest rate, and the time period involved. Therefore, without a time period in the question there is not enough information to answer the question. [Crosswind Manual 7.3, 7.4; No PMBOK® Guide Reference]