Consider a Project Having the Following Seven Activities

question 66

Essay

Consider a project having the following seven activities:
Normal Normal Crash Crash Maximum
Immediate Time Cost Time Cost Weeks
Activity Predecessors (weeks) ($) (weeks) ($) Reduced
A none 4 3,000 3 6,000 1
B none 3 5,000 2 7,000 1
C A 9 2,000 7 4,000 2
D A, B 2 3,000 2 3,000 0
E B 9 4,000 6 7,000 3
F C, D 8 4,000 6 9,000 2
G E, F 5 2,000 3 5,000 2
(a)What is the expected project completion time?
(b)What is the critical path?
(c)What is the most economical way and how much will it cost to reduce the completion time of the project by three weeks? By five weeks?

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Definitions:

Straddles

An investment strategy that involves purchasing both a call and put option on the same asset with the same strike price and expiration date, used to bet on volatility without predicting direction.

Asian Call Option

A type of call option where the payoff depends on the average price of the underlying asset over a specified period rather than at maturity.

Underlying Asset

The financial asset upon which derivative contracts, such as options and futures, are based.

Exercise Price

The price at which the holder of an option can buy or sell the underlying security or commodity.