PK0-005 Project Management Concepts Practice Question
A company wants to select a project based on the time it takes to recover the initial investment. Which project selection method should be used?
⚠ Common exam trap
PK0-005 often tests the definitional mapping between business questions and financial metrics; the trap is choosing NPV or IRR because they are 'more sophisticated,' when the question specifically asks about time to recover the investment.
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
✓
Payback period
The payback period method specifically measures the time required to recover the initial investment from project cash flows. When the selection criterion is 'time to recover the initial investment,' payback period is the exact definition being described. NPV, IRR, and cost-benefit analysis evaluate profitability or value, not recovery time.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Net Present Value (NPV)
Why it's wrong here
NPV discounts all future cash flows to present value and sums them, indicating absolute value created rather than the duration of recovery. It is the right method when ranking projects by value added, but the stem asks how long until cumulative inflows repay the initial outlay, which payback period reports.
- ✗
Internal Rate of Return (IRR)
Why it's wrong here
IRR calculates the discount rate at which a project's net present value equals zero, expressing percentage return rather than elapsed time. It is the correct selection method when comparing projects on profitability relative to cost of capital, but the stem asks for the period until cumulative cash inflows repay the initial outlay.
- ✗
Cost-benefit analysis
Why it's wrong here
Cost-benefit analysis compares total expected costs against total expected benefits, producing a net value or ratio rather than a duration. It suits go/no-go decisions on financial viability, yet the stem requires the elapsed period until cumulative inflows equal the initial investment, which payback period measures.
- ✓
Payback period
Why this is correct
Payback period calculates how many periods are needed for cumulative cash inflows to equal the initial outlay, directly answering the stem's criterion of time to recover investment. It ignores cash flows after the break-even point, unlike net present value or internal rate of return.
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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.