Free PMI Project Management Professional (PMP) Practice Question

The correct answer is Project C with an NPV of $310,000. In project selection using the Net Present Value (NPV) method, the project with the highest positive NPV should be chosen. NPV represents the difference between the present value of cash inflows and the present value of cash outflows over a period of time. A higher NPV indicates that a project is expected to add more value to the organization.

In this scenario:

• Project A has an NPV of $250,000
• Project B has an NPV of $180,000
• Project C has an NPV of $310,000
• Project D has an NPV of $290,000

Project C has the highest NPV among all options, making it the best choice according to this method. It's important to note that while NPV is a widely used and valuable project selection tool, it should not be the sole criterion for decision-making. Other factors such as strategic alignment, resource availability, and risk should also be considered in the project selection process.