Apsc 221 Exam Review

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A. There may be uncertainty in estimating project parameter values as a result of __________. 1. technologicalchange 2. change in sales volume or market share 3. inflation 4. generaleconomic activity levels within an industry 5. all of the above.

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All of the Above

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B. There are many sources of useful information in cost and revenue estimating, such as __________. 1. thebuilding code 2. accountingrecords 3. market analysts 4. general economic activity levels within anindustry 5. all of the above.

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Accounting Record

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C. __________ is a dimensionless number that indicates how a cost or price has changed with time with respect to a baseyear. 1. A sunk cost 2. A real dollar 3. An index 4. An interest factor 5. all of the above.

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An Index

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D. Parametric cost estimating is the use of historical cost data and statistical techniques to predict__________ costs. 1. sunk 2. variable 3. depreciation 4. future 5. all of theabove.

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Future

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E. A Cost Estimating Relationship(CER) is a mathematical model that describes the cost of an engineering projectas a function of one or more __________ variables. 1. cost 2. design 3. depreciation 4.fixed 5. all of the above.

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Design

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F. Decisional equivalence is a consequence of the __________ on the part of a decision maker among available choices. 1.understanding 2. indifference3. market analysis 4. study of general economic activity levels within anindustry 5. all of the above.

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Indifference

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G. Market equivalence is aconsequence of the ability to __________ one cash flow for another at zerocost. 1. understand 2. predict impact of 3. exchange 4. analyse 5. all of the above.

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Exchange

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H. Mathematical equivalence is a consequence of the mathematical relationship between __________ . 1. first costand salvage value 2. sunk costs and opportunity costs 3. depreciation andmarket value 4. time andmoney 5. all of the above.

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Time and Money

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I. A cash flow diagram is a graph that summarizes the timing and __________ of cash flows as they occur overtime. 1. interest rate 2. magnitude3. index 4. relationships 5. Control.

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Magnitude

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J. Effective interest rate is the actual but not usually stated interest rate, found by converting a given rate with _________ compounding period to an equivalent interest rate with aone-year compounding period. 1. an unknown 2. an arbitrary 3. a present worth 4. a future worth5. all of the above.

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An Arbitrary

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K. The Capital Cost Allowance refers to __________. 1. the allowable equivalent annual cost of capital 2. theannual depreciation rate the government allows 3. the annual depreciation expense the government allows.4. the amount of sunk costs that are allowed to be incorporated in theanalysis. 5. equivalent annual cost of capital calculated over the allowed timeperiod(s).

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The annual depreciation expense the government allows.

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L. When conducting a, defender andchallenger are identical, replacement analysis what condition needs to be true?1. Equivalent annual cost of capital must be increasing over time. 2. Totalannual costs can be described as a simple parabola (Y=aX2+bX+c). 3. Revenues are the same for bothalternatives. 4. Sunk costs are known and can be incorporated in theanalysis. 5. Equivalent annual cost of maintenance expenses must be decreasing.

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Revenues are the same for both alternatives.

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M. Installing a new piece ofequipment sometimes involves substantial up-front costs, called installationcosts. Which of the following is an example of such a cost? 1. Disruption ofproduction 2. Training of workers 3. Reorganization of processes 4. Upgradingof electrical wiring 5. allof the above.

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All of the above

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N. Which of the following is NOTan example of actual dollars? 1. A photocopier will cost $2,200 one year fromnow 2. The fasterturnaround time at the congested loading dock will save $50,000 per year intoday’s dollars 3. Elliot Weisgerber’s income rose from $40,000 per yearin 2010 to $42,000 in 2012 4. They expect the irrigation system will bring them$22,000 per year in additional revenues 5. all of the above.

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The faster turnaround time at the congestedloading dock will save $50,000 per year in today’s dollars

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O. Sensitivity analysis is anapproach to project evaluation that can be used to gain a better understandingof how __________. 1. management decisions effect the likelihood of changemanagement success or failure 2. uncertainty affects the evaluation by examining changes to projectparameters 3. the probabilitydistribution function changes over time 4. to assess the consequences, oreffect, of its occurrence 5. to mitigate the severity of negative consequences.

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Uncertainty affects the evaluation by examiningchanges to project parameters

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P. In determining relevant risksand formulating proactive strategies for their mitigation, the project team canpay a little in terms of extra time and cost initially, or it must be preparedto __________. 1. spend time planning, scheduling and controlling project variables2. pay potentiallyexorbitant amounts of time and money in the future 3. pay for in-depth strategic and tacticalanalysis 4. assess the consequences, or effect, of its occurrence 5. mitigatethe severity of negative consequences.

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Pay potentially exorbitant amounts of time and money in the future.

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Q. The severity of negativeconsequences in a project’s life span is __________. 1. unknown until detailedmodeling is concluded 2. greatest early in the project’s life 3. bounded orlimited in scope 4. minimalearly in the project’s life 5. the period of greatest worry.

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Minimal early in the project's life.

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R. Which of the following is NOTan aspect of change management? 1. minimize unplanned operational disruption 2.achieve performance improvements 3. controlling, scheduling and planning 4. understand associatedimplementation risks 5. all of the above.

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Controlling, scheduling and planning.

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S. Individuals who both recognizeand seize opportunities are referred to as 1) independents. 2) entrepreneurs. 3)intrapreneurs. 4) franchisees. 5) speculators.

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Entrepreneurs.

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T. Low start-up costs andsimplicity of operations are among the main advantages of ________. 1) aco-operative 2) a soleproprietorship 3) selling shares 4) incorporating 5) none of these.

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A sole proprietorship.

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U. A decrease over time in averageprices of goods and services is called __________. 1) project variance 2)monetary easing 3) sunk costs 4) payback 5) deflation.

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Deflation.

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V. Project managers face ethicaldecisions on a daily basis. Which is an example of such? 1) Offers of giftsfrom contractors 2) Pressure to alter status reports 3) False reports forcharges of time 4) Pressures to compromise quality to meet penalty schedules 5)all of these.

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All of these.

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W. When alternatives foraccomplishing a specific task are being compared over one year or less they arereferred to as Present Economic Studies and ________. 1) the before-tax MARR isused 2) only the Present Worth is calculated 3) the time value of money can be ignored 4) thepresent worth of costs is set equal to the present worth of revenues 5) none ofthese.

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The time value of money can be ignored.

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X. One significant cost that isoften forgotten is the effect on the time of everyone affected by change. Manypeople in the organisation will need to give up time to __________. 1) explainhow things work to those involved in designing changes 2) be consulted on theeffectiveness and realism of planned change 3) provide ideas for improvements4) be trained and have changes explained to them 5) all of the above.

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All of the above.

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Y The effective interest rate isthe actual but not usually stated interest rate when the compounding period isnot calculated on an annual basis. Which of the following statement is true? 1)Effective will always be above nominal, regardless of the number of compoundingperiods 2) Effective will always be below nominal, regardless of the number ofcompounding periods 3) Effectivewill always be above nominal, when there is more than one compound period inthe year 4) Effective will always be below nominal, when there is morethan one compound period in the year 5) none of these.

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Effective will always be above nominal, when there is more than one compound period in one year.

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Z. The formulas we use forarithmetic gradients always convert the gradients into either a Present orAnnual worth cash flow ________ time periods before the first non-zero gradientamount. 1) one 2) two3) three 4) four 6) none of these.

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Two.

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A. Which of the following is NOTone of the risk management steps? 1) analysis of probability and consequences2) mitigation strategies 3)planning and scheduling 4) risk identification 5) control anddocumentation.

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Planning and Scheduling

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B. If the annual savings are notconstant, we can calculate the payback period by __________. 1) setting thepresent worth of all costs equal to the present worth of all savings 2) theratio of first cost over the first year sum of all savings 3) accounting forthe need to recover capital quickly 4) deducting each year of savings from the first cost untilthe first cost is recovered 5) none of these.

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Deducting each year of savings from the first cost until the first cost is recovered.

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C. The text states that adisadvantage of using the internal rate of return method is that __________. 1)we need to calculate the after-tax MARR 2) the method used is only anapproximation 3) there maybe more than one internal rate of return 4) interest tables are notprovided in fractional amounts 5) linear interpolation between interest ratesis not 100% accurate.

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There may be more than one internal rate of return.

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D. The CAPM asserts that thereturn on any stock depends upon its risk relative to the __________. 1)weighted average cost of capital 2) the portion of debt financing 3) market 4) risk freeinterest rate 5) weighted average cost of equity.

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Market.

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E. Sensitivity analysis is anapproach to project evaluation that can be used to gain a better understandingof how __________. 1) management decisions effect the likelihood of changemanagement success or failure 2) uncertainty affects the evaluation by examining changes to projectparameters 3) the probability distribution function changes over time 4)to assess the consequences, or effect, of its occurrence 5) to mitigate theseverity of negative consequences more.

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Uncertainty affects the evaluation by examining changes to project parameters.

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F. Companies are taxed on__________. 1) revenues 2) netprofits 3) expenses 4) assets 5) equity

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Net Profits

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G. Once an asset has beeninstalled and has been operating for some time, the costs of installation andother expenses incurred up to that time are __________. 1) are depreciated overthe estimated life of the asset after taking into account the half-year rule 2)called sunk costs and areno longer relevant to any decision to replace the current asset 3) arereferred to as real dollars and the cash flow needs to be adjusted to make themactual 4) are required to be reported to the Canada Revenue agency so anaccurate salvage value can be provided 5) all of the above.

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Called sunk costs and are no longer relevant to any decision to replace the current asset.

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H. Inflation __________. 1)describes the increase in monetary exchange rates as determined by marketforces 2) is the increaseover time in average prices of goods and services 3) is how theprobability of tax rate changes due to environmental forces 4) assesses theconsequences of expanding market share 5) mitigates the severity of negativeconsequence.

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Is the increase over time in average price of goods and services.

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I. One particularly useful summarystatistic is the expected value, which is the __________ of a random variable.1) variance 2) mode 3) mean4) standard deviation 5) range.

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Mean.

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J. A project organization canchoose to __________ risk. 1) accept 2) minimize 3) share 4) transfer 5) all of the above.

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All of the above.

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K. What are the two dimensions ofchange management? 1) organisational and strategic 2) human and organisational 3) tactical andstrategic 4) stories and legends 5) business and competitive.

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Human and organizational.

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L. When conducting a replacementanalysis, where the defender and challenger are identical, what condition needsto be true? 1) Equivalent annual cost of capital must be increasing over time.2) Total annual costs can be described as a simple parabola (Y=aX2 +bX+c). 3) Revenues are the same for bothalternatives. 4) Sunk costs are known and can be incorporated in theanalysis. 5) Equivalent annual cost of maintenance expenses must be decreasing.

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Revenues are the same for both alternatives.

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How cool is Ben for making these flash cards?

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Super Cool.