This paper proposes a new algorithm for the optimal placement of the phasor measurement unit. The proposed algorithm is based on the concept of finite space solution of any binary problem. This algorithm has considered all possible cases; therefore, the possibility of obtaining a global solution is very high. The large system is divided into several subsystems. The buses (transmission lines) connected between the subsystems are called interconnected buses (lines). The proposed algorithm is implemented through two steps. First step identifies the optimal placement for each subsystem by checking on all possible solutions, the overall optimal placement for the entire system is gathered in the second step. Finally, all possible placements of the phasor measuring units with the optimal numbers are identified to select the best placement based on the user applications. In this work, the Jordanian power system is considered as a case study to validate the proposed algorithm. Four algorithms in the literature are used for the comparison using different IEEE test systems. The algorithm is computed in MATLAB 2020a.