Business Case Writing Financial Analysis in Business Cases

Question 1

Which financial metric measures the time required to recover the initial investment from net cash inflows?

Accepted Answer

Payback Period

Answer

Net Present Value

Answer

Internal Rate of Return

Answer

Return on Equity

Question 2

In a business case, NPV stands for:

Accepted Answer

Net Present Value

Answer

Net Profit Value

Answer

Nominal Project Value

Answer

Net Performance Value

Question 3

A business case with an IRR greater than the company's cost of capital should generally be:

Accepted Answer

Accepted

Answer

Rejected

Answer

Deferred indefinitely

Answer

Reviewed by external auditors

Question 4

Which cost type is excluded from a business case's incremental analysis because it has already been incurred?

Accepted Answer

Sunk costs

Answer

Variable costs

Answer

Opportunity costs

Answer

Direct costs

Question 5

A sensitivity analysis in a business case is used to:

Accepted Answer

Test how NPV changes when key assumptions vary

Answer

Identify the project sponsor

Answer

Calculate employee bonuses

Answer

Determine marketing spend

Question 6

Which discount rate is most commonly used in US corporate business cases to reflect the minimum acceptable return?

Accepted Answer

Weighted Average Cost of Capital (WACC)

Answer

Federal funds rate

Answer

Prime lending rate

Answer

Treasury bill rate