PK0-005 Project Management Concepts Practice Question
A project manager is evaluating two projects. Project A has an initial investment of $50,000 and expected annual returns of $15,000 for 5 years. Project B has an initial investment of $80,000 and expected annual returns of $22,000 for 5 years. Based on payback period, which project should be selected, and what is the payback period for that project?
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
✓
Project A, 3.33 years
Project A payback = 50,000/15,000 = 3.33 years. Project B payback = 80,000/22,000 = 3.64 years. Shorter payback is better, so Project A with 3.33 years.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Project A, 3.00 years
Why it's wrong here
Incorrect calculation.
- ✗
Project B, 3.64 years
Why it's wrong here
Project B has longer payback period.
- ✗
Project B, 3.00 years
Why it's wrong here
Incorrect calculation.
- ✓
Project A, 3.33 years
Why this is correct
Correct. Shorter payback period is preferred.
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