You have been asked to estimate the costs for a project to build an industrial power plant.Based on historical data,the steam turbine accounts for 30 percent of the total costs for the plant.If the steam turbine costs $300,000,the expected top-down estimated cost for this project would be __________.
A)$10,000
B)$100,000
C)$900,000
D)$1,000,000

Question

Quizplus · Accepted Answer

We can use the concept of top-down estimating to estimate the total cost of the project. If the steam turbine accounts for 30% of the total cost, then we can estimate the full cost by dividing the turbine cost by 0.3:

Total cost = Steam turbine cost / 0.3 = $300,000 / 0.3 = $1,000,000

Therefore, the expected top-down estimated cost for this project would be $1,000,000, which is option D.

You Have Been Asked to Estimate the Costs for a Project