Disounted cash flow q

Submitted by y0zh on Thu, 03/21/2013 - 10:44

A project is being advertised to solicit bidders. The buyer has asked for two types of price first, if


payment is made in total upon completion of the project; second, if payment is made 50 percent at the


midpoint of completion and 50 percent upon total completion. This is a two-year project that is being


priced at $10,000,000 when the cost of money is not included. Assume money is borrowed in two equal


increments-at the start of year 1 and year 2. If the interest rate over the two years is eight percent,


the total bid under each option (i.e., payment at the end; payment at midpoint) is ________.
A. $11,844,000; $11,412,000
B. $10,400,000; $10,040,000
C. $10,800,000; $10,400,000
D. $11,232,000; $10,832,000
E. $12,484,000; $11,244,000

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PMP / CAPM exam Question bank
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y0zh

Thu, 03/21/2013 - 10:45

The cost of money and cash flow can adversely affect the financial status of the project. One method of encouraging early payment of invoices is to offer a discount for payment within a few days. If an invoice for $10,000 was paid within (x) days (see each possible answer for value of x), the method "two 10, net 30" would provide a savings of ________.
A. $100 (x = 30)
B. $200 (x = 30)
C. $300 (x = 10)
D. $200 (x = 10)
E. cannot be determined from available data

sspawar

Thu, 03/21/2013 - 12:29

These are from old stuff.

Term Cost of money is not related to PMBOK.
Cost of capital may be a term similar to this.

Better avoid old stuff.

I obserVed this thing that PMI changes many terms in her new versions each time. Also revise detailing and omit many thing.
When we use this type of old stuff , it creates confusion misconception and others also get involved them.

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admin

Fri, 03/22/2013 - 07:10

Avoid such questions, not related to PMP.