which project to select

Submitted by sunitaPMP on Wed, 01/30/2013 - 00:48

came across this question.

 

Which project should you selet?

a) project A with oppertunity cost $100,000

b)Project B with Benefit cost ratioof 0.75

c)Project C with IRR of -2%

d)Proj D with NPV of  $100,000

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PMP / CAPM exam Question bank
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admin

Wed, 01/30/2013 - 05:40

Similar question was just discussed, search the forum

sunitaPMP

Wed, 01/30/2013 - 06:29

am not finding it.So what is the search string for this question?

peeyushm

Wed, 01/30/2013 - 09:09

 Here is similar discussion: http://www.pmzilla.com/need-your-inputs-0

Ans of this Q should be D

b) and c) are not favorabel condition 

a) not sure about  worth of this project

d) NPV = income-cost = $100K +ve, which is good for investment. 

Hence ans id D)

sunitaPMP

Wed, 01/30/2013 - 18:30

Hello SSPAWR ,

Can you please explain answer for this?

Thanks,

nitinhamir5

Wed, 01/30/2013 - 18:35

 


a)  In this option, if you choose the project you are missing a opportunity of $100k gain from other project.


b)  Benefit to cost ratio is .75, means less benefits than the amount we are spending.


c) IRR is -ve , that is rate of return from project is -ve.


d) NPV is $100k , which is best option for obvious reasons.


 


Thanks


Nitin

sspawar

Thu, 01/31/2013 - 01:24

 Option D is the answer.

option b and c are nonprofitable.

option A has a opportunity cost , does not reveal any profit.

NPV = 100K means this is the net saving.