PK0-005 Project Management Concepts Practice Question
A project manager is selecting a project from several proposals. The project with the highest Net Present Value (NPV) also has the longest payback period. Which TWO factors should the project manager consider when recommending this project? (Select TWO).
⚠ Common exam trap
PK0-005 often tests the misconception that the highest NPV project should always be rejected if its payback period is long, or that payback period alone should drive selection — candidates must recognize that NPV and strategic alignment are the stronger justification factors.
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
✓
The high NPV indicates strong long-term profitability
Option B is correct because NPV discounts all future cash flows to present value, so the highest NPV signals the greatest expected long-term profitability and value creation, which is a primary financial justification for selecting the project despite its longer payback period. Option C is correct because strategic alignment is a key qualitative selection criterion; a project can have the best NPV yet still be rejected if it does not support the organization's goals, so the project manager must weigh strategic fit alongside financial metrics. Options A, D, and E are not correct: the scenario explicitly states this project has the longest payback period, not the shortest, and lowest initial cost or minimal resource requirements are not given and are not the deciding factors when NPV and strategy point toward selection.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
The project has the shortest payback period
Why it's wrong here
The stem already states this project has the longest payback period, so claiming the shortest contradicts the given data and cannot be a factor. Payback period measures how quickly cumulative cash inflows recover the initial outlay, making it relevant when comparing proposals with similar NPVs or when liquidity constraints dominate.
- ✓
The high NPV indicates strong long-term profitability
Why this is correct
NPV discounts all future cash flows to present value, so the highest NPV signals the greatest absolute value creation over the project's full life. This justifies accepting the long payback period, since the stem's constraint is long-term profitability rather than speed of recovery.
- ✓
The project aligns with organizational strategy
Why this is correct
Strategic alignment determines whether a financially attractive project actually advances organisational objectives, which NPV alone cannot capture. When payback is longest, this qualitative fit justifies tolerating delayed returns, satisfying the stem's need to weigh non-financial factors alongside the highest NPV.
- ✗
The project has the lowest initial cost
Why it's wrong here
Initial cost is not the deciding factor here; NPV already discounts all future cash flows against that outlay, so a low initial cost can still yield poor value. Initial cost matters when capital budgets are tightly capped and proposals must fit within a fixed funding envelope.
- ✗
The project requires minimal resources
Why it's wrong here
Minimal resource requirements address execution capacity, not the financial trade-off between NPV and payback period that the stem asks the manager to weigh. Resource minimisation is the right consideration when skilled staff or infrastructure are the binding constraint on which projects can proceed.
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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
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