PMI Professional in Business Analysis (PMI-PBA) — Question 1

A business analyst is conducting a cost-benefit analysis of potential solution options. The stakeholders have indicated that the estimated growth rate is very important to them.
Which technique will allow the business analyst to determine this information?

Answer options

• A. Net present value (NPV)
• B. Payback period
• C. Return on investment (ROI)
• D. Internal rate of return

Correct answer: D

Explanation

The Internal Rate of Return (IRR) is specifically designed to estimate the growth rate of potential investments, making it the most suitable technique in this scenario. While Net Present Value (NPV), Payback Period, and Return on Investment (ROI) provide important financial insights, they do not directly focus on growth rate estimation like IRR does.