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6. Examine the NPV value. An NPV greater than one is good, and the project should be approved. An NPV less than one is bad, and the project should be rejected.

When comparing two projects, the one with the greater NPV is typically better, although projects with high returns (PVs) early in the project are better than those with low returns early in the project. Table 4-1 provides an example of an NPV calculation.

EXAM TIP You likely will not have to calculate NPV for your CAPM or PMP exam. I've included the whole scenario here to provide an understanding of the formula. Basically, better than one is good; less than one means your project is losing money.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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