When Using the Beta Probability Distribution to Estimate Activity Times,which

question 16

Multiple Choice

When using the beta probability distribution to estimate activity times,which of the following statements is TRUE?

• A) The project manager is usually the only person involved in making time estimates, since obtaining estimates from workers involved in the activities would result in inconsistent estimates.
• B) The beta distribution is used as a way of approximating a normal probability distribution for time estimates.
• C) The use of most optimistic, most likely, and most pessimistic times for an activity will result in a determination of the expected times for that activity.
• D) The larger the difference between most pessimistic time and most optimistic time for an activity, the smaller the variance of that time estimate.

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Definitions:

NPV

Net Present Value, a calculation used to determine the present value of a series of future cash flows by discounting them at a specific rate.

Cash Flows

The total amount of money being transferred into and out of a business, particularly concerning its operating, investing, and financing activities.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Capital Budget

An estimate of the major capital and investment expenditures over a period, and the means of financing them.