In this question, what is asked to calculate?
BAC = $80,000
AC = $50,000
EV = 70% of $80,000 = $56,000
Therefore, CPI = EV/AC = 1.12. This indicates that you are performing under budget, hence the formula to be used for TCPI will be:
TCPI = (Work Remaining)/ (Funds Remaining) = (BAC-EV)/(BAC-AC) = 0.8 in this case.
As such, you need to continue with a Cost Performance Index of 0.80 to complete the project, which is a favorable condition.
Keep in mind, that had we been performing over budget, the formula for TCPI would have been
TCPI = (BAC-EV)/ (EAC-AC), and
EAC could have been calculated as BAC/CPI
Hope that clarifies.
At that time TCPI should be
TCPI = BAC-EV/( EAC-AC) but since it is under budget then CPI <1
TCPI = BAC-EV/( BAC-AC) might be used . CPI>1
Hopefully it clarifies!
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