PK0-005 Project Management Concepts Practice Question
A project manager is selecting a project using financial methods. Which THREE of the following are valid project selection methods? (Select THREE).
⚠ Common exam trap
PK0-005 often tests the confusion between project selection methods and project planning tools — WBS and scope statement are planning outputs, not selection methods.
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
✓
Net Present Value (NPV)
Net Present Value (NPV) is a valid financial project selection method because it discounts all future cash flows to present value and selects projects with a positive NPV, directly measuring profitability in today's dollars. Internal Rate of Return (IRR) is also valid, as it calculates the discount rate at which a project's NPV equals zero, allowing comparison of a project's expected return against the organization's required rate of return or cost of capital. Payback period is a valid financial selection method too, since it measures how long it takes for cumulative cash inflows to recover the initial investment, helping rank projects by liquidity and risk exposure. By contrast, a Work Breakdown Structure (WBS) is a scope decomposition deliverable, not a financial selection technique, and a scope statement documents project boundaries and deliverables rather than evaluating financial viability, so neither belongs among financial project selection methods.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Work Breakdown Structure (WBS)
Why it's wrong here
A WBS decomposes project scope into deliverables and work packages; it performs no financial calculation, so it cannot rank or select projects by ROI, payback or NPV. It is tempting because it is a core planning artefact, and it would be the right choice when breaking an already-selected project's scope into manageable, estimable work packages.
- ✓
Net Present Value (NPV)
Why this is correct
NPV discounts all future cash inflows and outflows to present value, so projects can be ranked by absolute financial return. This satisfies the stem's requirement for a valid financial selection method, unlike scoring or weighted matrices, which are non-financial.
- ✓
Internal Rate of Return (IRR)
Why this is correct
IRR calculates the discount rate at which a project's net present value equals zero, letting candidates be compared by percentage return. It is a recognised discounted cash flow technique, satisfying the stem's demand for financial project selection methods.
- ✓
Payback period
Why this is correct
Payback period measures how long cumulative cash inflows take to recover the initial investment, a straightforward financial ranking technique. It satisfies the stem's requirement for valid financial selection methods, unlike benefit measurement or constrained optimisation approaches.
- ✗
Scope statement
Why it's wrong here
A scope statement documents what the project will deliver; it is a planning artefact, not a financial selection method. It is tempting because scope underpins project approval, but selection methods such as payback period, NPV, or IRR compare monetary returns, which a scope statement does not provide.
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Last reviewed September 2026 · checked against the official CompTIA exam blueprint
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