Consider the Following Project -What Is the Latest Time That Activity B Can Start

question 70

Multiple Choice

Consider the following project.
$$\begin{array} { | c | c | c | } \hline \text { Activity } & \begin{array} { c } \text { Imunediate } \\\text { Predecessor }\end{array} & \begin{array} { c } \text { Activity Time } \\\text { (drys) }\end{array} \\\hline \text { A } & - - & 3 \\\hline \mathrm { B } & - - & 4 \\\hline \mathrm { C } & \mathrm { A } & 4 \\\hline \mathrm { D } & \mathrm { A } & 6 \\\hline \mathrm { E } & \mathrm { B } & 5 \\\hline \mathrm { F } & \mathrm { C } , \mathrm { D } & 4 \\\hline \mathrm { G } & \mathrm { E } _ { \mathrm { F } } \mathrm { F } & 7 \\\hline\end{array}$$
-What is the latest time that activity B can start without delaying the project?

• A) 0
• B) 8
• C) 4
• D) 7

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Definitions:

Liquidity Premium (LP)

Additional return that investors demand for holding an asset that is not easily convertible to cash without a loss in value.

Real Risk-free Rate

The return on an investment with no risk of financial loss, adjusted for inflation.

Inflation Premium

The part of the nominal interest rate that represents compensation to the lender for the loss of purchasing power due to inflation.

Maturity Risk Premium

The additional return that investors demand for holding a bond until its maturity due to the potential for a change in the value over time.