Free PMP Certification Practice Questions:


Consider the expected cash flows from the following 5 projects. Projects A, C, E are mutually exclusive projects and Projects B and D are independent. Which of the following projects should be selected, assuming a 10% discount rate?



A) B, C, D

B) B, D, E

C) C, D

D) A, B, E


  • [Ans: A]


    • For mutually exclusive projects, the NPV (Net Present Value) method should be used for evaluating projects. Specifically, the project with the highest NPV should be selected amongst the mutually exclusive projects. Since Projects A, C, E are mutually exclusive, Project C should be selected since it has the highest NPV ($1,148.58).



    For projects which are independent, any project which has a positive NPV should be selected. Since Projects B, D are independent, both Project B and Project D should be selected since they both have positive NPV.





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