PK0-005 Project Management Concepts Practice Question
A company is considering a project with an initial investment of $100,000 and expected annual cash inflows of $30,000 for 5 years. The discount rate is 10%. What is the approximate Net Present Value (NPV)? (Present value of annuity factor for 5 years at 10% is 3.791)
⚠ Common exam trap
PK0-005 often tests whether candidates confuse undiscounted cash flow totals with properly discounted NPV, so any answer equal to (total inflows − investment) without applying the annuity factor is the trap.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
$13,730
NPV discounts future cash inflows back to present value and subtracts the initial investment. Using the annuity factor: PV of inflows = $30,000 × 3.791 = $113,730. NPV = $113,730 − $100,000 = $13,730, which is positive, meaning the project adds value at a 10% discount rate.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$50,000
Why it's wrong here
$50,000 subtracts the $100,000 outlay from the undiscounted $150,000 total, skipping discounting altogether. Applying the given annuity factor gives $113,730, so NPV is $13,730. $50,000 would be correct only with a 0% discount rate, where time value of money is ignored.
- ✗
-$13,730
Why it's wrong here
A negative NPV of -$13,730 would require discounted inflows below the $100,000 outlay, but $30,000 × 3.791 = $113,730, giving +$13,730. The sign is inverted, likely from subtracting inflows from the investment. Negative NPV signals rejection, which would be the finding had the annuity factor been smaller.
- ✗
$150,000
Why it's wrong here
$150,000 treats the undiscounted five-year total ($30,000 × 5) as the NPV, ignoring the 10% discount rate entirely. Discounting is the defining step of NPV; the annuity factor 3.791 exists precisely to convert those nominal inflows into present value. $150,000 would only arise if the discount rate were zero.
- ✓
$13,730
Why this is correct
Multiplying the $30,000 annual inflow by the 3.791 annuity factor gives a present value of $113,730; deducting the $100,000 initial investment yields $13,730. This satisfies the stem's requirement to discount all five years' cash flows at 10% and subtract the upfront outlay.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official CompTIA exam blueprint
This PK0-005 practice question is part of Courseiva's free CompTIA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PK0-005 exam.