1. When preparing a bid price for a project, Debby uses the following data: John's salary ($20,000), Mary's salary ($30,000), cost of materials ($10,000), required profit ($10,000). What is the bid price for doing the project?
a. $70,000
b. $60,000
c. More than $70, 000, because cost overruns always occur
d. More than $70,000 in order to include indirect costs
2. Capital expenditures are those that will benefit the firm for a period of time of more than a year.
a. true
b. false
3. In making decisions using benefit-cost analysis, analysts often find themselves struggling to deal with trade-offs between benefits and costs.
a. true
b. false
4. IRR is the best capital budgeting technique because it identifies the rate of return on an investment.
a. true
b. false
5. Crashing a schedule entails:
a. adding extra resources to the job to speed things up
b. abandoning a schedule, and replacing it with a new one that takes into account current information
c. recognizing that because a schedule will not be achieved, it should be abandoned
d. lengthening the amount of time tasks need to be carried out in order to reflect the realities of getting a job done
6. A frequently encountered problem with budgets is that the project cost data that forms the basis of the budget is often based on optimistic assumptions.
a. true
b. false