Which of the following conditions would be the MOST probable reason for a security project to be rejected by the executive board of an organization?

Question

Options

• AThe Net Present Value (NPV) of the project is positive
• BThe NPV of the project is negative
• CThe Return on Investment (ROI) is larger than 10 months
• DThe ROI is lower than 10 months

• A
  5% (1)
• B
  85% (17)
• C
  10% (2)

Explanation

A negative NPV means the project is expected to lose more money than it generates over time, making it financially unjustifiable - executive boards typically reject investments that destroy value rather than create it. Option A is wrong because a positive NPV means the project generates more value than it costs, which is exactly what boards want to approve. Options C and D both misapply ROI reasoning: ROI is typically expressed as a percentage return, not a time period - a payback period of 10 months would be the time-based metric, and even then, a shorter payback period (like less than 10 months, option D) would actually be favorable, not a reason for rejection.

Memory tip: Think of NPV as a simple verdict - Positive = Profit (approve), Negative = loss (reject). When NPV is negative, the organization would literally be better off not doing the project at all.

No community discussion yet for this question.