PMP · Question #1071
A bank is considering building another branch in one of three neighboring cities. The project manager has been tasked with demonstrating the benefits of building a new branch, renting an existing…
The correct answer is B. Calculate the costs for each option in each location and compare the net present value (NPV) for. The project manager needs to evaluate the financial viability and benefits of three different expansion strategies across multiple locations for a bank.
Question
A bank is considering building another branch in one of three neighboring cities. The project manager has been tasked with demonstrating the benefits of building a new branch, renting an existing building, or not expanding at all. How should the project manager proceed?
Options
- APerform a gap analysis on renting in each of the locations.
- BCalculate the costs for each option in each location and compare the net present value (NPV) for
- CPerform a Kano analysis on building a new branch versus renting in each of the locations.
- DCalculate the payback period (PBP) for building a new branch in each location versus renting an
How the community answered
(34 responses)- A3% (1)
- B76% (26)
- C6% (2)
- D15% (5)
Why each option
The project manager needs to evaluate the financial viability and benefits of three different expansion strategies across multiple locations for a bank.
A gap analysis identifies the difference between the current state and a desired future state but does not primarily focus on the financial benefits or comparative cost-benefit of different implementation strategies.
Calculating the Net Present Value (NPV) for each option in each location provides a comprehensive financial assessment by considering the time value of money, allowing for a direct comparison of the long-term profitability and benefits of each alternative. This method helps the bank make an informed decision based on the expected financial returns over the project's lifespan.
Kano analysis is used to categorize customer preferences and satisfaction levels for product features, not for evaluating project financial feasibility or comparing expansion strategies.
While payback period (PBP) is a financial metric, NPV is generally preferred for long-term investment decisions as it considers the entire project lifespan and the time value of money, unlike PBP which only focuses on how quickly the initial investment is recovered.
Concept tested: Project financial analysis, investment appraisal techniques
Topics
Community Discussion
5
Wesley A.Mar 23, 2026B is correct because NPV lets you compare the financial value of all three options across all locations side by side. I bit on the payback period answer the first time around, but PBP ignores the time value of money and the do-nothing option, which is exactly why D is the trap here.
Bao N.Mar 25, 2026NPV is the right call but the do-nothing option is what actually narrows it, since the question is really asking you to justify doing anything at all, and payback period will never give you that baseline.
Bao N.Mar 18, 2026I first leaned toward D because payback period shows up a lot in these cost comparison questions, but the stem is asking you to compare three distinct options across multiple locations, and NPV is the financial tool that accounts for the time value of money across all of them. Once I noticed the question wants a full benefits comparison including the do-nothing option, B is the only one that gives you an apples-to-apples financial analysis.
Wei W.Mar 27, 2026Going with A. Gap analysis fits because you are comparing build, rent, or do nothing across three cities.
Wesley A.Mar 28, 2026Actually it is B because that scenario is describing an options analysis, not a gap analysis. Gap analysis is about comparing current state versus desired future state, not weighing build, rent, or do-nothing alternatives.