Free PMI Project Management Professional (PMP) Practice Question

The correct answer is False. While a negative NPV typically indicates that a project is not financially viable, it should not be the sole factor in project selection. Other considerations may include:

1. Strategic value: A project might align with long-term company goals or provide a competitive advantage.
2. Market entry: The project could be a stepping stone into a new market or technology.
3. Regulatory compliance: Some projects may be necessary to meet legal requirements.
4. Social responsibility: Projects with negative NPV might fulfill important corporate social responsibility objectives.
5. Learning opportunities: The project could provide valuable experience or knowledge for future initiatives.
6. Synergies with other projects: It may enable or enhance other profitable projects.

While NPV is a crucial financial metric, project managers should consider a holistic view of the project's potential impact on the organization. The decision to pursue or reject a project should be based on a comprehensive analysis that includes both quantitative and qualitative factors.