Program Management Professional (PgMP) — Question 1

An organization is considering a new program. The business analyst believes that the benefits to the organization would equate to $1,550,000 in five years. If the rate of return for this program is six percent what is the maximum amount the organization should invest in this program?

Answer options

• A. $1,158,250
• B. It depends on the internal decision making process.
• C. $2,074,249
• D. $1,550,000

Correct answer: A

Explanation

The correct answer is A, $1,158,250, which is the present value of the future benefits discounted at a 6% rate over five years. Options B and D do not provide a specific investment amount, while C overestimates the present value of the future benefits.