PV calculation question

Submitted by amber on Sun, 02/17/2013 - 14:56

 Please help me in understanding why correct answer is option 1 I have applied correct PV formula and my answer is coming closest to option 2. can any one show me how calculations is to be done to get 4000 which seems to be incorrect answer.

Question : 
What is the present value if the organization expects to make $500,000 three years from now and the annual interest rate is 4 percent?
1.   $4000
2.   $5000
3.   $25000
4.   $4500
Correct Answer is : 1

A is the correct answer.
Present Value = FV/(1+R)n. FV is the future value, R is the interest rate, and n is the number of time periods. 500000/(5*5*5) = 4000.

For below question I think correct answer is option 4, it is confusing looking at the explanation given for this quest as it says correct answer is option 1 however in explanation explains about option 4 methodology. Please advise.

 

Question : 
Templates and forms which are available in the organization and are part of organization's ________ project plan development.
1.   Assumptions
2.   Constraints
3.   Software
4.   Methodology
Correct Answer is : 1

A is the correct answer.
Templates and forms which are available in the organization are reusable components. Any resource that can be reused as a useful tool is part of the total methodology of project planning.

For below question I think seller's profit is limited in Firm fixed price contract but correct option is 2 please advise why ?

Question : 
In which of the following contract types the seller's profit is limited?
1.   Cost-plus-percentage-cost contract
2.   Cost-plus-fixed-fee contract
3.   Firm Fixed price contract
4.   Fixed-price-incentive fee contract
Correct Answer is : 2

B is the correct answer. Cost-plus-fixed-fee contract and Cost-plus-incentive-fee contract where seller's profit is limited

 

Forums: 
PMP / CAPM exam Question bank
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raza82

Sun, 02/17/2013 - 15:39

for the 1st question, I dont know how you got 5000, I didnt even get close to it.

 

Future Value = 500000

Number of years = 3

Interest Rate = 4% = 4/100 = 0.04

PV = FV/(1+r)^n

   = 500000/(1+0.04)^3 

   = 500000/(1.04)^3

   = 500000/1.12

    = 446428.57

 

I guess some mistake in second question as well, I didnt see PMP Book usng this terminology.

 

For the third question, they are right......

Because in CPFF = the seller will be paid for the actual cost + only a fixed fee which is determined at the begining of the contract, so whatever the seller does whether he saves the cost or the cost increases, at the end he will paid the same fixed fee which is his profit.

Wheras in Fixed Price contract, althoug the price is determined at the begining, the profit as well as the cost is not shown to the buyer and is part of the total price of the contract, so the seller has the flexibility of increasing the total/unit price because the cost is not shown to the buyer. Mind it, if he quotes a high price, probably he will not be awarded the contract at all.

 

I have gone through this mock test earlier, can you remind me which mock test are these questions from?

 

 

sspawar

Sun, 02/17/2013 - 17:03

 what is source of your questions . Third question is ok . but first 2 are totally wrong.

there are numerous good question banks. try to avoid old and non-quality question banks.

amber

Mon, 02/18/2013 - 10:04

These questions have been taken from techfaq360 I scored 84% in it, is it not good question bank ?

sspawar

Mon, 02/18/2013 - 11:02

 I could only see and solve free package of techfaq360, and as I remember, there were not such blunders.

Few mistakes , I think 2-3% , I saw in every question banks.