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PK0-005 Practice Question: A project has earned value (EV) of $50,000,…
A project has earned value (EV) of $50,000, actual cost (AC) of $60,000, and planned value (PV) of $55,000. What is the cost performance index (CPI)?
⚠ Common exam trap
Candidates often confuse CPI with SPI (schedule performance index), leading candidates to mistakenly divide EV by PV instead of EV by AC, which yields option A (0.91).
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
0.83
The cost performance index (CPI) is calculated as EV divided by AC. With EV = $50,000 and AC = $60,000, CPI = 50,000 / 60,000 = 0.8333, which rounds to 0.83. A CPI less than 1.0 indicates the project is over budget, as each dollar of work completed costs more than planned.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
0.91
Why it's wrong here
CPI is EV divided by AC, so $50,000 ÷ $60,000 = 0.83, not 0.91. The figure 0.91 is tempting because it resembles the result of dividing EV by PV ($50,000 ÷ $55,000 = 0.91), which is the schedule performance index, not the cost performance index.
- ✗
1.20
Why it's wrong here
CPI is EV divided by AC, giving $50,000 ÷ $60,000 = 0.83, not 1.20. The value 1.20 is tempting because it is AC divided by EV ($60,000 ÷ $50,000), the inverse ratio, which would only be used to derive the estimate at completion via the bottom-up formula.
- ✓
0.83
Why this is correct
CPI is earned value divided by actual cost: $50,000 / $60,000 = 0.83. A value below 1.0 indicates the project is over budget, since each dollar spent has delivered only 83 cents of earned value.
- ✗
1.10
Why it's wrong here
CPI is EV divided by AC, giving $50,000 ÷ $60,000 = 0.83, not 1.10. The value 1.10 is tempting because it is PV divided by EV ($55,000 ÷ $50,000), a ratio describing planned versus earned value, which is not the cost performance index.
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