According to the PMI-PBA Exam Practice Test and Study Guide, 2nd edition, chapter 8, page 179, incremental budgeting is a technique that allows agile teams to estimate and allocate funds for each iteration or release of a product. This technique enables the teams to respond to changing requirements and priorities, and to deliver value to the customer faster. Incremental budgeting also reduces the risk of over- or under- budgeting, as the teams can adjust their estimates based on the actual costs and benefits of each increment.
The other options are not suitable for agile teams, as they do not support the agile principles of flexibility, collaboration, and customer satisfaction. Requesting the finance team to allocate a budget based on historical data may not reflect the current or future needs of the product. Providing the budget to the finance team for only the planned increments may not account for the changes that may occur during the product development.
Extrapolating the budget based on the current cost performance index (CPI) may not be accurate or reliable, as the CPI may vary depending on the scope, schedule, and quality of each increment. References:
* PMI-PBA Exam Practice Test and Study Guide, 2nd edition, chapter 8, page 179
* PMBOK Guide, 7th edition, section 8.1.3, page 269