Sample PMP® Question: February 2016



You are in the middle of deciding between two projects.  The business groups have made a lot of effort in collecting payback information, future cash flows, etc  Which of the following is true?


A.  Discounted cash flow analysis does not consider money’s time value.
B.  NPV is the sum of the Present Value cash inflows.
C.  IRR does not account for the cost of capital.
D.  Payback period does not consider the time value of money.



D.  Both Discounted Cash Flow and IRR account for the cost of money over time, so A and C are false statements.  Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows, so B is an inaccurate definition. D is a true statement.


Based on question data supplied by: 1000 Challenge PMP Questions
Author: Mohit Arora
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