Business Case Writing Business Case Writing 2

Question 1

Which financial metric shows the time required for an investment to generate enough returns to recover its initial cost?

Accepted Answer

Payback Period

Answer

Payback period measures how long it takes for cumulative cash flows to equal the initial investment outlay.

Question 2

In a business case, the 'do nothing' scenario is included primarily to:

Accepted Answer

Show the cost of inaction and establish a baseline

Answer

The 'do nothing' baseline quantifies what happens if the organization takes no action, making the case for change more compelling.

Question 3

When documenting assumptions in a business case, what is the recommended best practice?

Accepted Answer

List assumptions with their potential impact if wrong

Answer

Explicit assumptions with stated impacts allow stakeholders to assess risk and validate the case's reliability.

Question 4

A sensitivity analysis in a business case is used to:

Accepted Answer

Test how changes in key variables affect the outcome

Answer

Sensitivity analysis varies key inputs (costs, revenue, adoption rates) to show how the business case conclusion changes under different scenarios.

Question 5

Which section of a business case typically includes a SWOT or PESTLE analysis?

Accepted Answer

Strategic Context / Situation Analysis

Answer

The strategic context section uses tools like SWOT or PESTLE to frame the external and internal environment driving the need for the business case.

Business Case Writing Practice Test