Business Case Writing Business Case Writing MCQ 2 — Questions and Answers
Question 1: Which financial metric measures the time required to recover the initial investment from projected cash flows?
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Payback Period (Correct answer)
- Return on Equity (ROE)
Correct answer: Payback Period
Payback period calculates how long it takes for cumulative cash inflows to equal the upfront investment cost.
Question 2: A business case that ignores risks associated with a proposed project is considered:
- Concise and executive-friendly
- Incomplete and potentially misleading (Correct answer)
- More persuasive to stakeholders
- Aligned with best practices
Correct answer: Incomplete and potentially misleading
A credible business case must include a risk assessment to present a balanced and honest picture to decision-makers.
Question 3: What is the primary purpose of a sensitivity analysis in a business case?
- To identify the most optimistic financial outcome
- To determine how results change when key assumptions vary (Correct answer)
- To justify the chosen discount rate
- To summarize stakeholder feedback
Correct answer: To determine how results change when key assumptions vary
Sensitivity analysis tests how much the outcome changes when individual variables (e.g., cost, demand) are adjusted.
Question 4: Which section of a business case typically outlines who must approve the project and their authority levels?
- Executive Summary
- Financial Analysis
- Governance and Decision Framework (Correct answer)
- Appendix
Correct answer: Governance and Decision Framework
The governance section defines approval authorities, escalation paths, and decision-making roles.
Question 5: When presenting a business case to a C-suite audience, which content approach is most effective?
- Detailed technical specifications first
- Bottom-up data tables before conclusions
- Lead with strategic impact and key recommendations (Correct answer)
- Include all supporting data inline
Correct answer: Lead with strategic impact and key recommendations
Executives prefer top-down structure: strategic rationale and recommendations upfront, with details available in appendices.
Question 6: A 'do-nothing' or 'status quo' option is included in a business case primarily to:
- Inflate the benefits of the preferred option
- Provide a baseline for comparing all alternatives (Correct answer)
- Satisfy regulatory reporting requirements
- Reduce the number of options stakeholders must evaluate
Correct answer: Provide a baseline for comparing all alternatives
The status quo option establishes a cost-of-inaction baseline that makes the value of proposed alternatives clear.
Question 7: Which of the following best describes a 'benefit owner' in a business case?
- The executive who funds the project
- The person accountable for realizing a specific stated benefit (Correct answer)
- The author of the business case document
- The external consultant who validated the financials
Correct answer: The person accountable for realizing a specific stated benefit
A benefit owner is the named individual responsible for ensuring a specific benefit is actually delivered post-implementation.
Business Case Writing Business Case Writing MCQ 2
Which financial metric measures the time required to recover the initial investment from projected cash flows?