Financial Planning Flashcards
7 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Planning flashcards as text
What does the 'social cost of carbon' estimate?
Answer: The monetized damages to society from emitting one additional tonne of CO2
The social cost of carbon estimates economic damages from an incremental tonne of CO2 emissions.
A carbon auditor reviewing a company's climate transition plan finds capital allocated to targets but no funding identified. What is the main concern?
Answer: The plan lacks credibility because targets are not supported by financial resources
Credible transition plans link targets to concrete financial resources and capital expenditure.
When forecasting future carbon compliance costs, which input carries the most uncertainty?
Answer: Future carbon price trajectories
Future carbon prices depend on policy and market dynamics, making them the most uncertain forecast input.
Which approach treats the cost of carbon as a hurdle rate adjustment rather than a per-tonne charge?
Answer: Raising the required return for carbon-intensive projects
Some firms raise the hurdle rate for high-emitting investments to reflect added climate risk.
A company's renewable power purchase agreement (PPA) locks in electricity at a fixed price for 15 years. What financial planning benefit does this provide?
Answer: Protection against volatility in future electricity prices
A fixed-price PPA hedges against electricity price swings while supporting renewable energy claims.
Which statement about lifecycle cost analysis (LCCA) for low-carbon equipment is accurate?
Answer: It includes purchase, operating, maintenance, and disposal costs over the asset's life
LCCA captures total cost of ownership, often favoring efficient equipment with higher upfront cost.
An emissions reduction project has an NPV of -$20,000 at the company's cost of capital, but adding an internal carbon price makes NPV +$15,000. What should the auditor conclude?
Answer: The project's attractiveness depends on recognizing the cost of carbon
Including carbon cost reveals value hidden by conventional appraisal, making the project viable under carbon-adjusted assumptions.