PMI-ACP · Question #381
PMI-ACP Question #381: Real Exam Question with Answer & Explanation
The correct answer is C: The project should be deferred. A negative NPV means the present value of the project's future cash flows is less than the initial investment — it is expected to destroy value under current conditions. In many Agile/PMI frameworks, this signals the project should be deferred (delayed until conditions change,
Question
Net present value (NPV) is a ratio that compares the value of a dollar today to the value of that same dollar in the future. An NPV that is negative suggests what?
Options
- AThe project should be rejected
- BI don't have enough information
- CThe project should be deferred
- DThe project should be put on hold until the value is 0
Explanation
A negative NPV means the present value of the project's future cash flows is less than the initial investment — it is expected to destroy value under current conditions. In many Agile/PMI frameworks, this signals the project should be deferred (delayed until conditions change, discount rates shift, or the business case improves) rather than outright rejected. Deferral leaves open the possibility of revisiting the project when it may become viable, whereas rejection is permanent. Note: in strict finance, a negative NPV is often simply cause for rejection, but in certification contexts 'defer' reflects the nuance of 'not now, but conditions may change.'
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