Consulting Case Interview Practice Questions

Answer: c - This exemplifies the Payback Period of Project X. The Net Present Value (NPV) is the discounted total worth of all benefits minus the costs over multiple time periods. The Internal Rate of Return is used to compare the internal benefit of two of more projects. The Benefit Cost Ratio is a ratio that compares benefits to the pricing of other options. A PMIS is any software or automated tool for performing project management.

Key Takeaway: Payback period isn’t as effective a methodology as NPV to assess projects, but it is a nice heuristic that helps managers understand how soon the project’s cash flows will cover the costs of the project.