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In: Accounting

Activity Duration Predecessor Cost A 8 - 25000 B 12 - 42000 C 7 A 18000...

Activity Duration Predecessor Cost
A 8 - 25000
B 12 - 42000
C 7 A 18000
D 10 A 27000
E 14 B,C 46000
F 5 B,C 12000
G 3 D,E 7000
H 12 D,E 42000
I 10 F,G 36000

Consider the following project data. Assume costs are incurred upon completion of an activity. At the end of the project a lump sum payment of 340,000 is to be made.

a) Find the net present value of the project at a discount rate of 3% per period.

Activity Crashed Duration Normal Duration Crashed Cost Normal Cost
C 5 7 22000 18000
E 11 14 58000 46000
I 8 10 44000 36000

b)Given an option is available to reduce the duration of following activities at additional cost, what would be the optimal project duration? Assume indirect costs to be negligible.

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