TOPIC: PMP Questions

How to solve the following cash flow sums from following site
sites.google.com/site/pmpbank/pmpquestionbank

The following should be used for questions 15 through 17.
A project manager is assigned to a project early in the project lifecycle. One of the things that must be done is to do a justification for the project. Since very little information is known about the project, the estimates are considered to be rough estimates. The following table is the project manager’s estimate of the cash flow that will take place over the next five years.

End of Year Cash Flow In Cash Flow Out
1 0 500,000
2 300,000 90,000
3 400,000 100,000
4 100,000 175,000
5 50,000 35,000

15. What is the payback period for this project?
a. One year
b. Two years
c. Three years
d. Four years



17. If the net present value for each of the cash flows were calculated at a 10% interest rate, the net present value cash flow at the end of five years would be:
a. Greater than the total cash flow without the net present value applied
b. Less than the total cash flow without the net present value applied
c. The same as the total cash flow without the net present value applied
d. Unable to be calculated with the information supplied