Updated Final Ans

1. Which of the following is the correct sequence of life cycle of a project?
Options
Planning, Selection, Scheduling, Termination.
Selection, Scheduling, Implementation, Evaluation, Control.
Planning, Implementaion, Scheduling, Terminaion.
Planning, Implementation, Scheduling, Termination
2. The net present value of a project is Rs. 9 lakh. If its investment is Rs. 2 lakh and the cost of capital
is 10%, the benefit cost ratio is
Options
5.50
4.50
0.55
0.45
3. Capital budgeting decisions are
Options
Irreversible
affects the profitability of a firm

related with long run
all are true

4. Slack' or 'Float' is
Options
A spare time available for the completion of critical activities
The time required for the completion of non-critical activities
The difference the Latest start and earliest start time
The difference between latest start of preceeding event and earliest finish of suceeding activity
5. Duration of critical path is obtained by
Options
Subtracting the sum of duration of all activities from the sum of duration of all non-critical activities
The addition of duration of all non-critical activities
The sum of duration of all the activities on critical path
None of the above
6. In Matrix form of project organization
Options
The hierarchical principle is ignored
Responsibility and authority are commensurate
There is dual subordination
Both (a),and (c) above.

7. Which of the following is not an advantage of the traditional form of organization for the
management of projects?
Options
Budgeting and control are easy.
It facilitates better technical control.
It is easy to integrate the functions of all concerned departments towards the fulfillment of the project
objectives.
The lines of communication are well established.
8. If the acceptance of one project is dependent on the acceptance of the other project then they are
said to be
Options
Complementary
Mutually exclusive
Contingent
Economically dependent
9. Value chain analysis is aimed at identifying the activities of the firm that are contributing value to
the firm. Which of the following activities is considered to be a primary activity as per this analysis?
Options
Purchase of raw materials.
Creation of consumer awareness about the product.
Acquisition of process technology.
Recruitment of fresh people in the organization.

10. If there is a conflict between the line manager and project manager the staff prefer to
Options
Report to the project manager because he is superior to line manager
Report to the line manager as he controls their payments and promotions
Report to the general manager avoiding both line manager and project manager
None of the above
11. If two projects A and B are mutually exclusive then selection of one will
Options
Automatically select the other project
Automitically reject the other project
Both option are posssible
None of these
12. Which of the following project appraisal criteria does not assume that the risk of new projects
undertaken by a firm will be same as that of the existing projects?
Options
NPV
BCR
ARR.
Certainly equivalent method.

13. When there is declining trend in the resources available, the resource allocation should be
Options
Strictly based on a formula
Made on the existing pattern
Allocated by free bargaining between the divisions and the center
Made either by imposed priorities by the center of competitive bidding.

14. A one-year project which requires an initial investment of Rs. 10 lakh yields Rs. 6 lakh at the end of
the first year. The project's IRR is
Options
-60%
-40%
40%
60%
15. The technical managers should be appointed as project managers because
Options
They have good relationships with the technical departments
They understand how best to work with perfectionists
They become highly involved in technical matters and do not delegate
Both (a) and (b) above
16. Multiple Choice ( Select 1 out of 4 options, for the question below. )
Delphi method is used for
Options
capital budgeting decisions
project management
demand forecasting
all of these
17. A ' dummy activity' in a network diagram
Options
Has a project duration greater than zero
Increase the project duration
can be accomplished in zero time and consumes zero
resources
Always lies on critical path.
18. Which of the following is/are true?
Options
The NPV method if based on the assumption that the intermediate cash inflows are reinvested at a rate
of return equal to the internal rate of return
When the NPV is positive it implies that the project earns an excess return for the equity shareholders
only.
When the IRR is equal to the cost of capital it implies that the intermediate cash inflows are reinvested
at a rate of return equal to the cost of capital
Both (b) and (c) above
19. Which of the following statement is/are true?
Options
People who give brilliant ideas from their knowlegde and experience can very well manage in getting
their ideas implemented.
People who have great ideas are not necessarlily good implementers.
People who give brilliant ideas will always fail in getting things done.
People who are good at handling things will always possess creative thinking.
20. Which of the following statements is/are/true?
Options
By line-staff form of organization an efficient utilization of resources can be achieved.
The functional form of organization is not suitable to achieve effective utilzation of resoruces.
Matrix form of organization is not conducive to achieve effective realization of project objectives.
Divisional form of organization is suitable for effective utilization of resources
21. Which of the following is/are 'external reasons' for project failure?
Options
Dispute with local people.
Non-availability of skilled personnel.
Inflation
Labour disputes.
22. Traditional form of organization is suitable to
Options
The projects which are characterized by non-routine work
The projects which call for the coordination of different functional areas
The projects which contain a continuous flow of repetitive work
The projects which are dynamic in nature

23. Which of the following is not a part of a milestone schedule prepared in project planning?
Options
The date when the project starts.
The date when the project ends.
The inputs and standards of inputs required for each part of the project.
Major events like review meetings, testing, etc.
24. Frequent revision of the plans
Options
Will result in resource loss, confusion and lack of confidence among the personnel and ultimaltely
project failure
Is required after completing a significant part of the project
Is not required because for successful completion of the project the initial plan laid out should be
implemented strictly
Is necessary to review the plans periodically to make adjustments if necessary
Options
The maximum activity of a project will be in the conception and selection stage.
The procurement of materials is undertaken during the planning and secheduling stage.
The goals of a project are established during the planning stage.
The expenditure on a project will be maximum during the implementation stage.

26. Which of the following is true.
Options
The concept of crashing an activity is given both in PERT and CPM models
Both PERT and CPM techniques involve drawing network showing relationship between various
activities
PERT is determinstic and CPM is probabilistic .
Float and slack is used in both PERT and CPM
27. A certain activity has a budgeted cost of Rs 80,000 and at the time of the periodic progress review it
is estimated that 60 percent of the work has been accomplished at the cost of Rs 52,800. Therefore
cost over-run (under- run) is
Options
9.1%
34%
10%
15%
28. Which of the following statements is/are true?
Options
The critical path is the path with the shortest duration.
The duration of the critical path is the longest period in which the project can be completed.
The standard deviation of the duration of the critical path is the sum of the standard deviations of the
durations of the activities on the critical path.
When there is more than one critical path, any one of the paths can be crashed.
Options
Capital rationing exists when funds available for investment are inadequate to undertake all projects
which are otherwise acceptable.
Internal rationing is caused by a choice of hurdle rate higher than the cost of capital.
External rational arises by setting the limit to capital expenditure.
30. In order to motivate the project personnel, the project manager
Options
Should not act supportively, because this may increase the employees demands unreasonably
Should act threateningly which may result in employees conformation to the plans out of fear
Should not bother about the motivational responsibilities because he has got many other aspects to
attend.
Should act supportively because this may bring in confidence among employees that their interests
will be looked after
31. Which of the following might be the reasons for the failure of projects?
Options
Lack of proper planning.
Bad choice of technology
None of the above

32. Which of the following is /are internal reasons for project failure?
Options
Non-availability of equipment in time due to its use by other departments of the organization
Failure to raise required funds on time due to its use by other departments of the organization.
A steep rise in inflation and the exchange rates.
33. Benefit Cost Ratio (BCR) criterion can be considered as superior to net present value because
Options
In case of capital rationing, BCR ranks the projects correctly in the order of decreasingly efficient use
of capital
It considers the cash outflows beyond the current period
It can aggregate several smaller projects into a package
It can discriminate better between large and small

projects.
34. Which of the following is not a risk management tool in capital budgeting?
Options
Decision Tree Analysis
Coefficient of variance
PERT
Risk adjusted discount rate

35. Which of the following statement is true?
Options
Total float is the difference of free float and independent float
Independent float cannot be positive
Free float is always available for all the activities on critical path
Only the activities on the critical path have a float of zero
36. Which of the following statements is/are/true?
Options
Uniform Annual Equivalent (UAE) can also be referred to as Annual Capital charge.
The UAE (capital costs) increase with the extension of the replacement cycle.
The economic life of an asset refers to the number of years it can be used to produce a certain output
without maintenance.
Both (a) and (c) above
37. The earliest start time of an activity will be
Options
Equal to zero
Equal to time of first activity
Will be a positive value
All are possible

38. If the NPV profiles of two projects are not intersecting means
Options
There will not exist any conflict in ranking between the two projects
There shall be no Fisherian rate of return applicable for the two projects
That all the appraisal criteria on discounting basis would give each of them the same
All of (a), (b) and (c) above.
39. The internal rate of return can be said to be based on the assumption that the intermediate cash
flows are
Options
Perfectly certain
Highly variable
Reinvested at the cost of capital of the firm
Reinvested at a rate equal to the internal rate of return of the firm
40. Which of the following is/are true?
Options
A project is an ad hoc activity of the firm.
A project should be viewed as the main activity of the firm.
A project should be viewed as something which contributes to the ability of the organisation.
None of the above

41. Crashing of a project is concerned with
Options
reducing the time of various activities of a project
reducing the budget of a project
both (a) and (b) above
None of these
42. Which of the following is true with respect to Milestone Schedule?
Options
It is a written document containing description of the work to be done.
It contains the starting and ending date of the project and the events marking completion of the
major tasks in the project, along with their dates of completion.
It contains the details of inputs and standard of inputs required for each part of the project.
None of the above
43. Which of the following method is most suitable for forecasting the demand for power in the
country?
Options
Delphi Method
Chain Ratio Method
Econometric Method
Moving Average Method

44. In which of the following situations, product organization is not suitable?
i. When projects involve high levels of technical competence.
ii. For projects which require the integration of inputs from different
departments.
iii. For companies that are involved in repetitive projects of the same type.
Options
Only (i) above.
Only (ii) above.
Only (iii) above.
Both (i) and (ii) above.
45. Which of the following factors call for the project management?
Options
Interdependencies among the activities undertaken by various departments.
Size of the task involved
Either (a) or (b)
46. During which stage of the life cycle of project is the level of highest activity?
Options
Conception and selection.
Planning and scheduling.
Implementation, monitoring and control
Evaluation.
47. Which of the following statement/s is/are true?
Options
Two projects are said to be economically independent when cash flows of one project are influenced by
the cash flows of other project.
Two projects are said to be economically dependent when the acceptance or rejection of one project is
influenced by the acceptance (rejection) of the other project.
Two projects are said to be economically dependent when cash flows of one project are influenced by
the cash flows of other projects.
48. Abandonment of a project should be considered when
Options
The project is not feasible technically though it can be completed within the stipulated costs
It is feasible technically but it cannot be completed within the stipulated cost and time
If the PV of cash flows are more at the time of the proposal for abandonment than the PV of cash flows
realizable if the project is continued through its life
49. A project requires an initial investment of Rs. 10 crore and provides inflows of Rs.5 crore every year
for five years. The payback period of the project is
Options
5 years
4 years
3 years
2 years
50. A successful project manager should
Options
Adopt a well - built, mechanical approach to his problems
Attach a high value on technical perfection
Have a creative approach to use the resources efficiently and to solve human relation problems
seek an enduring solution to the problem
51. Price elasticity of demand is
Options
The ratio of change in price to current demand
The ratio of change in demand to change in price
The ratio of change in price to change in demand
The ratio of change in price to total demand
52. ABC Ltd which is going for expansion has made the following time estimate for completion of a
major activity on the critical path. Time in month Optimistic 9 Pessimistic 21 Most likely 15 The
variance of the activity would be ____month
Options
5
53. Projects A and B both involve the same outlay and offer the same IRR, which exceeds the
opportunity cost of capital. The cash flows generated by Project A are larger than those of B but
tend to occur later. Based on this one can conclude that
Options
Both projects A and B are equally viable
Both projects have NPV =0 at the same discount rate
Project A has a higher NPV than Project B
Both (b) and (c) above
54. Which of the following qualities should a project manager possess?
Options
Commitment to technology.
Zeal to exceed the objectives.
Tendency to test everything.
Willingness to take risks.
55. Conflict in the ranking of projects based on different appraisal criteria arises due to.
Options
Different initial investments.
Different useful lives.
Different reinvestment assumptions.
All of (a), (b) and (c) above

56. If the optimistic, most likely and the pessimistic estimates of time of an activity are 6,12 and 24
days respectively, then the expected time of that activity is
Options
12.75 days
13.00 days
13.20 days
13.50 days
57. When the cost of capital of a project is equal to its internal rate of return
Options
The NPV will be zero
The NPV wil be +ve
The NPV wil be -ve
Benefit cost ratio will be zero
58. If standard deviations of two projects are same but different means then what is true?
Options
Project are equally risky
Project with lower mean is less risky
Risk ranking of two project is not possible.
Project with higher mean is less risky

59. Ramanna Construcitons Ltd. is evaluating projects P, Q, R, S and T for investment. If project R
cannot be accepted unless at least two projects from the projects P, Q,S and T are accepted, then
the corresponding constraint can be represented as
Options
Payback period method is probabilistic
Based on entire life a project
Based on profit
Based on cash flows
60. Which of the following is/are the informational inputs for project planning?
Options
Statement of work
Project specifications.
Milestone schedule
All of the above

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1. Which of the following is the correct sequence of life cycle of a project?

Planning, Selection, Scheduling, Termination.

Selection, Scheduling, Implementation, Evaluation, Control.

Planning, Implementaion, Scheduling, Terminaion.

Planning, Implementation, Scheduling, Termination

3. Capital budgeting decisions are

affects the profitability of a firm

all are true

A spare time available for the completion of critical activities

The time required for the completion of non-critical activities

The difference the Latest start and earliest start time

5. Duration of critical path is obtained by

The addition of duration of all non-critical activities

The sum of duration of all the activities on critical path

None of the above

6. In Matrix form of project organization

The hierarchical principle is ignored

Responsibility and authority are commensurate

There is dual subordination

Both (a),and (c) above.

Budgeting and control are easy.

It facilitates better technical control.

The lines of communication are well established.

Purchase of raw materials.

Creation of consumer awareness about the product.

Acquisition of process technology.

Recruitment of fresh people in the organization.

Report to the project manager because he is superior to line manager

Report to the line manager as he controls their payments and promotions

None of the above

Automatically select the other project

Automitically reject the other project

Both option are posssible

Certainly equivalent method.

Strictly based on a formula

Made on the existing pattern

Allocated by free bargaining between the divisions and the center

Made either by imposed priorities by the center of competitive bidding.

15. The technical managers should be appointed as project managers because

They have good relationships with the technical departments

They understand how best to work with perfectionists

They become highly involved in technical matters and do not delegate

Both (a) and (b) above

Delphi method is used for

capital budgeting decisions

Has a project duration greater than zero

Increase the project duration

can be accomplished in zero time and consumes zero

Always lies on critical path.

18. Which of the following is/are true?

Both (b) and (c) above

19. Which of the following statement is/are true?

By line-staff form of organization an efficient utilization of resources can be achieved.

Divisional form of organization is suitable for effective utilization of resources

Dispute with local people.

Non-availability of skilled personnel.

22. Traditional form of organization is suitable to