Mid-Term Exam

# Mid-Term Exam

Mid-Term Exam

This midterm covers all of the material from weeks 1-4.  There are 10 essay questions on the exam.   Each question is worth 10 points.  You will need a calculator during this exam.  You will have 3.5 hours to complete the exam.  You may use your notes and textbook during the exam.  However, make sure you answering the questions in your own words and citing properly as needed.  Make sure you show all of your work as need in order to get credit.

1. A four-year financial project has net cash flows of \$20,000; \$25,000; \$30,000; and \$50,000 in the next four years. It will cost \$75,000 to implement the project. If the required rate of return is 0.2, conduct a discounted cash flow calculation to determine the NPV. Show your work to receive credit.

2. Explain how you would go about creating a risk management plan for a project. Please give specific examples.

3. For a project you are familiar with create a WBS. Identify all of the major components and provide three levels of detail.

4. Given the following information below:

Activity Duration Predecessors

A  2 weeks  Start

B  3 weeks  Start

C  5 weeks  Start

D  7 weeks  A

E  3 weeks  B

F  2 weeks  C

G  4 weeks  F

H  1 week  A

I  8 weeks  D,E,G

J  5 weeks  F

K  2 weeks  D,E,G,H

A. Determine the Critical Path and Project Duration.

B. What is the slack time (float) for activities A, B, G, and J?

5. How would you go about scheduling resources for a project? Give specific examples and explain why you use your approach.

6. Two projects are presented to the project selection committee. Project A will cost \$250,000 to implement and is expected to have annual net cash flows of \$75,000. Project B will cost \$150,000 to implement and should generate annual net cash flows of \$52,000. Using the payback period method which project is better? Show your work or no credit will be given.

7. Use a weighted score model to choose between three methods (A, B, C) of financing the acquisition of a major competitor. The relative weights for each criterion are shown in the following table as are the scores for each location on each criterion. A score of 1 represents unfavorable, 2 satisfactory, and 3 favorable. Explain why you selected the project you did and show all of your work for all of the calculations.

Method

Category  Weight  A  B  C

Consulting costs  20  1  2  3

Acquisition time  20  2  3  1

Disruption  10  2  1  3

Cultural differences  10  3  3  2

Skill redundancies  10  2  1  1

Implementation risks  25  1  2  3

Infrastructure  10  2  2  2

8. Using the network below and the additional information provided, find:  (a) The crash cost per day per activity.  (b) Which activities should be crashed to meet a project deadline of

 10 days at minimum cost.

(c) Find the new cost.

 ​ Normal Time Normal Crashed Cost Crashed

Time

 Activity (days) Cost (total) (days)

 A 7 \$300 \$700 3

 B 3 250 600 1

 C 6 500 900 5

 D 3 200 500 2

 E 2 300 400 1

9. You are tasked with estimating the costs of a project. Select a project you are familiar with and give a concise summary of that project (no more than a paragraph). Then explain how you went about estimating the costs for each part of the project. Explain specifically what methods you used and why you used those methods. Then explain if your estimates were correct or off. Explain why you think the results ended up the way they did.

10. You work for a technology company. Your company has come up with new technology that will revolutionize how we search the internet. What kind of project management structure would you recommend? What information would you like to have to make this recommendation and why?