CCP Exam Dumps - AACE International AACE Questions and Answers

To calculate the annual rate of return on the investment, you can use the formula for the compound annual growth rate (CAGR):

CAGR=(FVPV)1n−1\text{CAGR} = \left(\frac{FV}{PV}\right)^{\frac{1}{n}} - 1CAGR=(PVFV​)n1​−1

Where:

FVFVFV is the future value ($6,000)

PVPVPV is the present value ($3,000)

nnn is the number of years (8 years)

CAGR=(60003000)18−1≈(2)18−1≈0.091or9.1%\text{CAGR} = \left(\frac{6000}{3000}\right)^{\frac{1}{8}} - 1 \approx (2)^{\frac{1}{8}} - 1 \approx 0.091 or 9.1\%CAGR=(30006000​)81​−1≈(2)81​−1≈0.091or9.1%

To find the present value of a series of future payments, we use the present worth of an annuity formula:

P=A×((1−(1+i)−n)i)P = A \times \left(\frac{(1-(1+i)^{-n})}{i}\right)P=A×(i(1−(1+i)−n)​)

Where:

PPP is the present worth

AAA is the annual payment ($100,000)

iii is the interest rate per period (10% or 0.10)

nnn is the number of periods (5 years)

Plugging in the values:

P=100,000×(1−(1+0.10)−50.10)≈162,370P = 100,000 \times \left(\frac{1-(1+0.10)^{-5}}{0.10}\right) \approx 162,370P=100,000×(0.101−(1+0.10)−5​)≈162,370

Atarget contractis a form of contract where both the owner and contractor agree on a target cost, and both parties share any cost savings or overruns. This contract type encourages efficiency but has some drawbacks.

Key Points:

Disadvantages of Target Contracts:

No Competitive Bidding for Targets:The target cost is typically negotiated rather than competitively bid, which could lead to less competitive pricing.

Other Points:While target contracts encourage timely and economical completion and allow for early start and flexibility, the lack of competitive bidding for the targets can be a significant disadvantage.

Conclusion:The correct answer isB. No opportunity to competitively bid the targetsbecause this is a specific disadvantage associated with target contracts.

To find the value of equal year-end withdrawals made for 10 years with an initial investment of $50 at 6% interest, you use the annuity formula:

A=PV×i×(1+i)n(1+i)n−1A = \frac{PV \times i \times (1 + i)^n}{(1 + i)^n - 1}A=(1+i)n−1PV×i×(1+i)n​

Where:

AAA is the annuity payment (annual withdrawal)

PVPVPV is the present value ($50)

iii is the interest rate (6% or 0.06)

nnn is the number of periods (10 years)

A=50×0.06×(1+0.06)10(1+0.06)10−1≈5.35A = \frac{50 \times 0.06 \times (1 + 0.06)^{10}}{(1 + 0.06)^{10} - 1} \approx 5.35A=(1+0.06)10−150×0.06×(1+0.06)10​≈5.35

To determine "net income," the calculations typically needed include Depreciation, Taxes, and Income Before Taxes.Present Valuecalculations are typically used in capital budgeting to assess the value of future cash flows today, not directly in the calculation of net income. Net income is determined by subtracting expenses, including depreciation and taxes, from revenues, but present value calculations would not be directly involved in this particular income calculation.

Aperipherals reportis not typically considered part of a project cost and schedule forecast. Forecasts generally focus onusage of contingency,current trends of time and money, andchanges to the project execution plan. These elements directly impact the financial and scheduling aspects of a project. A peripherals report might refer to ancillary details or additional documentation that doesn't directly influence cost or schedule forecasts. Hence, the correct answer isC. Peripherals report.

TheNominal interest rateis the rate of interest before adjusting for compounding within the year. It disregards the effects of compounding periods that occur more frequently than annually. For instance, a nominal rate of 12% compounded monthly would still be referred to as 12%, without taking into account the fact that the effective annual rate would be higher due to monthly compounding. The other options, such as continuous compounding, simple interest, and minimum attractive rate of return (MARR), do account for compounding or are specific types of interest. Therefore, the correct answer isD. Nominal interest rate.

In this problem, the key is to determine theBudgeted Cost of Work Performed (BCWP), which refers to the portion of the budget allocated for the completed work as of a particular point in time. The BCWP is also known as theEarned Value (EV). It is a critical measure in project management, particularly in the Earned Value Management (EVM) system, as it allows for a comparison between the planned progress and the actual progress of the project.

Given:

Baseline budget (Total Planned Budget or BAC):$1,000,000

Project duration:12 months

Budgeted Cost of Work Scheduled (BCWS) for the first month:$108,000

Actual Cost of Work Performed (ACWP) for the first month:$100,000

Total physical progress:9%

Steps to determine the BCWP:

Calculate the Planned Value (PV):

This is the value of the work planned to be completed by a specific time.

Here, PV for the first month is $108,000.

Determine the Actual Cost (AC):

The AC is the cost incurred for the actual work performed, which is $100,000 in this case.

Calculate the Earned Value (EV) or BCWP:

BCWP is calculated by multiplying the total physical progress by the Budget at Completion (BAC).

Given that the physical progress is 9%, the BCWP can be computed as:

BCWP=Physical Progress×BAC\text{BCWP} = \text{Physical Progress} \times \text{BAC} BCWP=Physical Progress×BAC BCWP=0.09×1,000,000=$90,000\text{BCWP} = 0.09 \times 1,000,000 = \$90,000BCWP=0.09×1,000,000=$90,000

Conclusion:

The Budgeted Cost of Work Performed (BCWP) for this project at the end of the first month is$90,000, which matches option A. This calculation is critical in project management for determininghow much of the budgeted work has been actually completed, enabling accurate performance assessment against the project baseline.

Passive listeningoccurs when a person hears the words being said but does not fully process or receive the message behind those words. This type of listening involves a lack of engagement with the speaker and often results in missing key points or failing to understand the intended message. In contrast to active listening, where the listener actively engages with the speaker's words and tries to understand the meaning, passive listening is superficial and often ineffective in communication.

Anagentis a person who is legally authorized to represent another person, known as the principal, in business transactions or other matters. The agent can act on behalf of the principal and make decisions that bind the principal to certain actions or contracts. However, the agent's authority is limited to the "scope of authority" granted by the principal. This means that the agent can only perform actions that fall within the powers explicitly or implicitly given to them.

For example, in a construction project, an agent might be authorized to negotiate contracts with suppliers or contractors on behalf of the project owner. Still, they may not have the authority to make final decisions regarding project financing unless explicitly granted by the principal. The concept of an agent is fundamental in various fields, including cost estimating and project management, where clear delegation of authority ensures that decisions are made effectively and responsibly.

This role is crucial in maintaining a structured approach to decision-making, particularly in cost management, where the agent's decisions can directly impact the financial outcomes of a project. Miscommunication or overstepping the agent's authority could lead to financial discrepancies or legal disputes, making the definition and adherence to the scope of authority essential for both cost control and legal compliance.