PMP Process — Managing Technical Aspects Practice Question
Your project is running 15% over budget at the midpoint. The earned value (EV) is $500,000, actual cost (AC) is $575,000, and planned value (PV) is $550,000. The project sponsor is concerned and asks for an estimate at completion (EAC). Assuming the cost performance index (CPI) will continue as is, what is the EAC?
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
✓
$1,265,000
CPI = EV/AC = $500,000 / $575,000 ≈ 0.8696. BAC is derived from the midpoint: PV = $550,000 at 50% planned completion, so BAC = $550,000 × 2 = $1,100,000. EAC = BAC / CPI = $1,100,000 / 0.8696 ≈ $1,265,000. Option A is the BAC; Option B uses an incorrect formula; Option C would result from using AC + (BAC - EV) which assumes future work at planned rate, but the assumption is CPI continues.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$1,100,000
Why it's wrong here
This is the BAC ($1,100,000), not the EAC.
- ✗
$1,200,000
Why it's wrong here
This results from an incorrect formula, perhaps EV/PV or similar.
- ✗
$1,175,000
Why it's wrong here
This would be the EAC if using AC + (BAC - EV), assuming future work at planned rate, but the given assumption is that CPI will continue.
- ✓
$1,265,000
Why this is correct
Correct. EAC = BAC / CPI = $1,100,000 / 0.8696 ≈ $1,265,000.
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