PK0-005 Project Management Concepts Practice Question
A project manager is evaluating two project proposals. Proposal A has an NPV of $50,000 and a payback period of 2 years. Proposal B has an NPV of $30,000 and a payback period of 1.5 years. Which proposal is more financially beneficial based on NPV?
⚠ Common exam trap
The trap is that the question includes a tempting shorter payback period for Proposal B, and candidates who prioritize payback over the explicitly requested NPV metric pick the wrong answer.
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
✓
Proposal A because it has a higher NPV
Net Present Value (NPV) is the primary discounted cash flow metric for comparing project profitability; the higher the NPV, the greater the value created. Proposal A's NPV of $50,000 exceeds Proposal B's $30,000, so Proposal A is more financially beneficial on an NPV basis. Payback period is a secondary liquidity metric and does not override NPV when the question explicitly asks based on NPV.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Proposal B because it has a shorter payback period
Why it's wrong here
Payback period measures how quickly the investment is recouped, not total financial benefit; the stem explicitly asks for the NPV comparison, where Proposal A's $50,000 exceeds Proposal B's $30,000. Payback would be the deciding metric only if the question asked which proposal recovers its cost soonest.
- ✗
Cannot be determined from the information given
Why it's wrong here
NPV already expresses total discounted value in absolute currency, so Proposal A's higher $50,000 figure settles financial benefit without further data. Payback period measures how quickly outlay is recovered, not overall profitability. "Cannot be determined" would fit only if NPVs were absent or incomparable, such as differing project lifespans requiring equivalent annual annuity analysis.
- ✗
Both are equally beneficial
Why it's wrong here
Equal benefit would require identical NPVs, but Proposal A's $50,000 exceeds Proposal B's $30,000, so A is the more financially beneficial proposal. Payback period does not offset this difference because the stem's stated criterion is NPV alone, not a blended or risk-adjusted measure.
- ✓
Proposal A because it has a higher NPV
Why this is correct
NPV measures absolute financial value in today's currency, so Proposal A's $50,000 exceeds Proposal B's $30,000. The stem explicitly asks which is more beneficial based on NPV, making the shorter payback period irrelevant to this criterion.
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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.