Sunday, February 8, 2009

Last Q&A

I see that the question below had us everywhere.
22% thought the answer was Discounted Cash Flow
31% thought it was Net Present Value
4% answered: Internal Rate of Return
and 41% answered: Average Rate of Return

The question was:

What technique is used during the preparation of the business case to measure the excess or shortfall of the project cash flow?


The answer is:

Net Present Value

This question was a bit tricky as the BABOK does not define these techniques. In section 2.5.9 you will find a list of different techniques. Make sure you know where and when to use these techniques. A good definition of NPV is found on wikipedia.