PSI Project and Financial Management 5

Question 1

Which financial concept discounts future cash flows to reflect the time value of money?

Accepted Answer

Net Present Value (NPV)

Answer

NPV discounts all future cash flows back to the present using a required rate of return, reflecting that money today is worth more than money in the future.

Question 2

A project sponsor requests acceleration of the project schedule. The project manager proposes adding more resources to critical path tasks. This is an example of:

Accepted Answer

Schedule crashing

Answer

Crashing adds resources (people, overtime, equipment) to critical path activities to shorten the schedule, typically at an increased cost.

Question 3

What is the difference between a project constraint and a project assumption?

Accepted Answer

Constraints are known limiting factors; assumptions are considered true without proof

Answer

Constraints are known restrictions (budget, time, resources), while assumptions are factors believed to be true but not yet confirmed.

Question 4

Which stakeholder analysis technique maps stakeholders based on their power and interest in the project?

Accepted Answer

Power/Interest grid

Answer

The Power/Interest grid categorizes stakeholders by their level of authority and concern for project outcomes to guide engagement strategies.

Question 5

What is the Internal Rate of Return (IRR)?

Accepted Answer

The discount rate at which a project's NPV equals zero

Answer

IRR is the discount rate that makes the net present value of all cash flows from a project equal to zero, used to compare project profitability.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Project and Financial Management 5