Certified Associate in Project Management (CAPM) — Question 222

What is the projected annual yield of a project investment, incorporating both initial and ongoing costs into the estimated percentage growth rate that the project will have?

Answer options

• A. Annual rate of return
• B. Net present value
• C. Internal rate of return
• D. Return on investment

Correct answer: C

Explanation

The correct answer is C, Internal rate of return, as it specifically measures the expected growth rate of an investment by factoring in all costs. Option A, Annual rate of return, does not account for ongoing costs in the same way. Option B, Net present value, focuses on the difference between the present value of cash inflows and outflows, rather than a growth rate. Option D, Return on investment, measures profitability but does not directly reflect the growth percentage like the internal rate of return does.