PGMP · Question #82
You are the program manager for your organization. You have proposed a program that will cost $750,000 and will last for four years. Management is concerned with the cost of the program in relation…
The correct answer is D. $946,857. This is a future value (FV) calculation. The formula is FV = PV × (1 + r)^n, where PV = $750,000, r = 6% (0.06), and n = 4 years. FV = $750,000 × (1.06)^4 = $750,000 × 1.26248 ≈ $946,857. Management needs the program to return at least this amount to justify the investment at a…
Question
You are the program manager for your organization. You have proposed a program that will cost $750,000 and will last for four years. Management is concerned with the cost of the program in relation to the return your program will bring. If the rate of return is six percent what is the minimum value your project should return in four years based on the investment of the program?
Options
- A$750,000
- B$795,000
- C$750,001
- D$946,857
How the community answered
(65 responses)- A8% (5)
- B3% (2)
- C14% (9)
- D75% (49)
Explanation
This is a future value (FV) calculation. The formula is FV = PV × (1 + r)^n, where PV = $750,000, r = 6% (0.06), and n = 4 years. FV = $750,000 × (1.06)^4 = $750,000 × 1.26248 ≈ $946,857. Management needs the program to return at least this amount to justify the investment at a 6% rate of return. Anything less means the program fails to meet the expected return threshold, making D the minimum acceptable value.
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