PK0-005 Project Management Concepts Practice Question
An organization is evaluating two potential projects. Project A has an NPV of $50,000 and a payback period of 2 years. Project B has an NPV of $40,000 and a payback period of 1.5 years. The organization's policy is to select projects with the highest NPV. Which project should be selected?
⚠ Common exam trap
The trap is that Project B's shorter payback period looks attractive and tempts candidates to override the stated policy; the exam tests whether you follow the explicit decision criterion (highest NPV) rather than substituting your own judgment.
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 because it has a higher NPV
The organization's stated policy is to select the project with the highest NPV, and Project A has an NPV of $50,000 versus Project B's $40,000. Therefore Project A should be selected because it delivers greater net present value, which is the decision criterion the policy mandates.
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 because it has a higher NPV
Why this is correct
The organisation's stated policy selects the project with the highest net present value, so Project A's $50,000 NPV outranks Project B's $40,000. Payback period is a secondary liquidity measure and does not override the mandated NPV criterion.
- ✗
Project A because it has a longer payback period
Why it's wrong here
Payback period measures how quickly investment is recovered, not total value created; policy mandates highest NPV, and Project A already wins on that $50,000 figure. Selecting it for a longer payback period inverts the stated criterion. Payback period is decisive only when liquidity or risk-recovery speed is the governing constraint.
- ✗
Project B because it has a shorter payback period
Why it's wrong here
The payback period measures how quickly investment is recovered, but the policy explicitly ranks projects by NPV. Project B's $40,000 NPV is below Project A's $50,000, so it fails the stated criterion. Project B would be correct only if the selection policy used payback period.
- ✗
Project B because it has a lower NPV
Why it's wrong here
Project B's NPV is $40,000, lower than Project A's $50,000, so selecting it contradicts the stated policy of choosing the highest NPV. The shorter payback period is irrelevant under that policy. Project B would be correct if the organisation prioritised fastest capital recovery instead.
About these practice questions
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JA
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.