[Music] hi everyone welcome back we're going to do some pmp question practice today just a really quick video five questions a good way to start your day and a good way to prepare for your pmp exam and get a few different viewpoints on things that might appear in the exam see if your knowledge is up to scratch i'm going to walk through them for the first time as well so you know what i may not get everyone right but let's see how we go ultimately if you can get around 80 on your practice exams you're well placed for the real exam so let's delve straight into it so okay first one you're asked to decide which project is a better investment okay i can see where this is going project x takes three years to complete with a net present value okay so we're looking at npv uh of 125 000 and project y takes only two years i know this is going to be very funny actually to complete with a net present value of a hundred thousand dollars so this is potentially a trick question guys because our net present value already takes into consideration the years in its calculation so really all we want to do is take the highest value and that particular one is 125 and project x so what we want is uh letter b here so project x only let's see what we've got answer b fantastic the net present value calculation takes a number of years into consideration already this makes project x the right choice which has the higher npv of 125 000 wonderful how did you go for that one let's look at question two okay question two we've got you're a certified pmp working as a project manager in a company one of your colleagues is planning to take the pmp exam as well and asks for your guidance on preparation okay this is potentially around ethics here uh what should you do or maybe industry industry standards give them a few instructions and let them work out the rest i mean not great say you're too busy to help them probably not good we really want to help people as a pmp we want to help people in the industry as well give them whatever guidance you can provide based on your experience that's potential tell them to go to the pmi website and find the information they want i mean that's a very mediocre response so for me i think we're going to go with with letter c here let's have a look at what we've got okay fantastic how did you guys go part of your responsibility as a pmp holder is to guide those who are taking the pmp exam after you in order to give back to the profession and the industry it's actually a really great way to do it mentor those who are coming up as well let's look at question three okay so we've got uh cost okay great so cost information cost performance index what is the cpi they call it uh of a project with a okay and here we go we've got present value you're gonna have to know this on your exam because they might just say pv and if you don't know what these are it's going to be very troublesome so the present value of 7.95 uh earned value is ev of 850 000 and actual cost of 950 000. now even if you can't remember the cost performance index uh or the cpi calculation uh you can still have a crack at this just sort of work it out based on what you think might be correct so i mean if we've what have we got if we've earned uh earned value so we've completed the value of 850 000 worth and but but it's cost so i think that's what we're looking at here the cost is more than what we have actually put into it what we've actually earned and created the value of the earned value so the difference between those is a hundred thousand so let's say we've got a hundred thousand uh and just i mean without a calculator here uh what's a hundred thousand into a million so that's like ten percent roughly of a million like of a million and that's pretty close to a million right so it's going to be roughly 10 of something so okay this is the hardest one for me i wasn't great at this 1.12 you're over budget so we're earned value actual cost is is more so the actual cost is more so i think we're going to be over budget but the way that the cost performance index works i know this is that if it's over one you've delivered more and if it's less than one you've delivered less so that's when you're over budget so if we're oh gosh let's go with we are behind budget i know we're over budget so we're we've spent more and it's around about that 10 so this is very close it's about 11 11 uh we've delivered less 10 less okay that was a really long way of me figuring that out i'm sorry about that but that's what happens you know if you don't even if you don't know what it is you can sort of figure out uh which way you might want to go based on the the figures that you've got in front of you as long as you know what these things stand for uh let's have a look if it's number b okay that's wonderful so that is good news even if we've got that one wrong we'd still be sort of four out of five which is around 80 so that's what we want in earned value management the cost performance index is calculated by the formula earned value divided by the actual cost okay so we weren't far off there right like we weren't too far off and that calculation ends up as 0.89 i figure less than one means you've delivered less so that means you have paid more which means you are over budget so basically i always look at that one figure as your delivery you've delivered more if it's over one you've delivered less if it's less than one so if it's less you're behind schedule and you're over budget okay that was quite a long one sorry about that let's check out question four return on investment this is a little bit easier in is the percentage return we get from investing in something the your project cost the company two hundred thousand to complete okay so our cost is two hundred thousand and that project returns a benefit of 240 okay so basically the difference there is about 40 000 so that's a good start the return on our investment so our investment is 200 and uh so if we're looking at this uh there's a few different choices here 240 is too much for me uh so 40 000 is uh 20 000 is 10 so forty thousand is twenty percent of two hundred thousand that's right isn't it yeah so we're looking at twenty percent probably return on investment for our two hundred thousand dollars let's have a look uh answer a okay return on investment fantastic net income divided by so net income after costs right okay that's great so after our costs that's why we that's why that worked out the way it was so 40 000 is uh is the net income once we take away that two hundred thousand dollars that cost and we divide that by the total investment which is what we did okay so it worked out well so 240 minus 200 divided by 200 000 equals around 20 or exactly 20 last one how did you guys go so far last question five out of five let's go for it the benefit cost ratio this one's not too bad either i find these ones uh usually you want the largest benefit to the lowest cost obviously so it's used to compare benefits to the costs for a project if a pro as a project manager you are working for a company which has one of the following projects uh which one will you recommend based on the following vcrs okay benefit cost ratio so benefit to cost so it stands to reason that as a ratio it will be the highest ratio at the highest number basically so 2.05 i'm going to go for straight away and this is the same for all of these internal rate of return you want the highest net present value you want the highest return on investment you want the highest benefit to cost ratio you want the highest some of these are very easy once you know that simple way to work this out in your pmp exam let's have a look okay answer d fantastic we got it great work everyone better cost ratio equals benefit divided by cost so a higher value is better 2.05 is our uh most wonderful answer in this case five questions for your pmp check them out i'll post some more practice every day you guys can absolutely do it pass your exam i totally believe in you and i know you can do it go for it i'll see you next time