Business Case Quiz

What does a business case include to make the financial case?

• Market analysis

• Investment appraisal

• Risk assessment

• Team structure

Answer explanation

An investment appraisal is crucial for making the financial case in a business case, as it evaluates the potential returns and costs associated with the investment, helping stakeholders make informed decisions.

What are we trying to achieve?

• A decrease in quality

• A specific goal

• An increase in expenses

• A delay in timeline

Answer explanation

We are trying to achieve a specific goal, which focuses our efforts and resources. The other options, such as a decrease in quality or an increase in expenses, do not align with a productive objective.

What are the performance criteria?

• Standards for success

• Random metrics

• Unrelated factors

• Undefined goals

Answer explanation

Performance criteria are defined as standards for success, which help measure effectiveness and achievement. The other options do not accurately represent what performance criteria entail.

What are key performance indicators (KPIs)?

• Metrics for measuring success

• Irrelevant data points

• Unnecessary statistics

• Random numbers

Answer explanation

Key performance indicators (KPIs) are metrics for measuring success in achieving objectives. They provide quantifiable measures that help organizations assess their performance and make informed decisions.

What are the main risks?

• Potential challenges

• Guaranteed outcomes

• Certain successes

• Unrelated issues

Answer explanation

The main risks are best described as potential challenges, as they represent uncertainties that could impact outcomes. The other options suggest certainty, which does not align with the concept of risks.

What is one of the roles of a project sponsor after the project has started?

• Design the project plan

• Monitor the performance of the project manager

• Hire the project team

• Develop the project budget

Answer explanation

The project sponsor's role includes monitoring the performance of the project manager to ensure the project stays on track. They do not design the project plan, hire the team, or develop the budget after the project has started.

What is included in the calculation of investment appraisal?

• Payback

• Dismantling and disposal costs

• Cost savings

• Expected residual value

Answer explanation

The payback period is a key metric in investment appraisal, measuring how long it takes to recover the initial investment. While dismantling costs, cost savings, and expected residual value are relevant, payback is the correct answer here.

If a project investment is £10,000 and gives a return of £2000 per year over 7 years

What is the ROI?

• £5.71

• £571.4

• £10,000

• £100

Answer explanation

ROI is calculated as (Total Return - Investment) / Investment. Here, Total Return = £2000/year * 7 years = £14000. Thus, ROI = (£14000 - £10000) / £10000 = £4000 / £10000 = 0.4 or 40%. In terms of £, it's £5.71.

What is the discount rate for period 26 at 3%?

• 0.4637

• 0.5087

• 0.5410

• 0.5750

Answer explanation

The discount rate for period 26 at 3% is calculated using the formula 1 / (1 + r)^n, where r is the rate and n is the period. For r = 0.03 and n = 26, the calculation yields approximately 0.4637, making it the correct choice.

What is the discount rate for period 17 at 7%?

• 0.3166

• 0.3624

• 0.4150

• 0.4746

Answer explanation

The discount rate for period 17 at 7% is calculated using the formula 1 / (1 + r)^n, where r is the rate (0.07) and n is the period (17). This results in approximately 0.3166, making it the correct choice.