PMI-001 Q&A – Section 2: Integration Management (161-170)

Section 2: Integration Management

QUESTION 161
The amount of funds available for a company to invest in projects is called:
A. Working capital.
B. Sunk costs.
C. Value analysis.
D. Direct cost.
Answer: A

Explanation:
Sunk costs (choice B) are expended costs. Value analysis (choice C) involves finding a less costly way to do
the same scope of work. A direct cost (choice D) is directly attributable to an activity.
Source: PMP® Exam Prep Page: 110

QUESTION 162
There are two projects to choose between: Project A with an NPV of US $45,000 and Project B with an NPV
of US $85,000. What is the opportunity cost of selecting project B?
A. $45,000
B. $85,000
C. $40,000
D. $130,000
Answer: A
Explanation:
There are no calculations required. It is simply the value of the project(s) you did not select.
Source: PMP® Exam Prep Page: 110

QUESTION 163
As a project manager, you are presented with the following information on the net present value (NPV) of several potential projects. Which project is your BEST choice?
A. Project A with an NPV of $95,000
B. Project B with an NPV of $120,000
C. Project C with an NPV of $20,000
D. Project D with an NPV of -$30,000
Answer: B
Explanation:
You should pick the higher number.
Source: PMP® Exam Prep Page: 107

QUESTION 164
As a project manager, you are presented with the following information on the payback period for several possible projects. Which project is your BEST choice?
A. Project A with a payback period of 6 months
B. Project B with a payback period of 9 months
C. Project C with a payback period of 12 months
D. Project D with a payback period of 18 months
Answer: A
Explanation:
Pick the lower number.
Source: PMP® Exam Prep Page: 108

QUESTION 165
Which of the following would be the BEST project to select?
A. A project that will take six years to complete and has an NPV of $45,000
B. A project that will take three years to complete and has an NPV of $85,000
C. A project that will take eight years to complete and has an NPV of $30,000
D. A project that will take 10 years to complete and has an NPV of $60,000
Answer: B
Explanation:
Because net present value is the value in today’s dollars of different cash flows, the project with the highest
NPV is the best one. The number of years is included in the NPV calculation.
Source: PMP® Exam Prep Page: 107

QUESTION 166
What is present value (PV)?
A. Value of assets that a company owns
B. Today’s value of future cash flows
C. Future value of money on hand today
D. Current value of today’s assets adjusted for inflation
Answer: B
Explanation:
We convert a future cash flow into a value today. This allows us to DIRECTLY compare two future cash flows.
Source: PMP® Exam Prep Page: 107

QUESTION 167
Your company can accept one of three possible projects. Project A has a net present value (NPV) of US $30,000 and will take six years to complete. Project B has an NPV of US $60,000 and will take three years to complete. Project C has an NPV of US $90,000 and will take four years to complete. Based on this information, which project would you pick?
A. They all have the same value.
B. Project A
C. Project B
D. Project C
Answer: D
Explanation:
Remember, project length is incorporated when computing NPV. You would choose the project that provides
the most value, in this case the project with the highest NPV.
Source: PMP® Exam Prep Page: 107

QUESTION 168
Double declining balance is a form of:
A. Decelerated depreciation.
B. Straight line depreciation.
C. Accelerated depreciation.
D. Life cycle costing.
Answer: C
Explanation:
We need to know that double declining balance is a form of depreciation. That eliminates choice D. We also know that double declining balance is a form of accelerated depreciation, eliminating choices A and B. Therefore, C is the correct response.
Source: PMP® Exam Prep Page: 110

QUESTION 169
Which of the following sequences represents straight line depreciation?
A. $100, $100, $100
B. $100, $120, $140
C. $100, $120, $160
D. $160, $140, $120
Answer: A
Explanation:
Straight line depreciation uses the same amount each time period.
Source: PMP® Exam Prep Page: 110

QUESTION 170
You are managing a multi-million dollar project that is a joint venture between your company and another organization. You have repeatedly tried to get the contract and the project charter finalized between the two organizations, but there has been a great deal of arguing over language and details. The project’s scope has been expanding, costs have been increasing, and the schedule has been regularly lengthening. You learn very suddenly that the project has been cancelled, because the other organization withdrew its share of the funding for the project. What is the MOST likely reason that this occurred?
A. Failure to understand the budgetary process
B. Inadequate scope management
C. Lack of sponsor commitment
D. Poorly done initial cost-benefit analysis
Answer: C
Explanation:
This question gives examples of things outside of a project manager’s control. It is the role of the sponsor to define the initial project and protect it from changes.
Source: PMP® Exam Prep Page: 97, 306

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