Download BCS Practitioner Certificate in Business Analysis Practice v5.0.BAPv5.VCEplus.2023-11-27.38q.vcex

Vendor: BCS
Exam Code: BAPv5
Exam Name: BCS Practitioner Certificate in Business Analysis Practice v5.0
Date: Nov 27, 2023
File Size: 63 KB

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Demo Questions

Question 1
John has been working on a business case for opening up the overseas market to new products He has been asked to document the risks What SHOULD he do to ensure they are appropriately recorded? Select the TWO that apply
  1. Create a RAID log
  2. Document the source of each risk
  3. Identify an owner for each risk
  4. Provide justification or each countermeasure identified
  5. Impact assessment of each countermeasure identified
Correct answer: BC
Explanation:
A risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives. To ensure that risks are appropriately recorded, they should be documented in a consistent and structured way, such as using a RAID log (Risks, Assumptions, Issues and Dependencies). A RAID log should include information such as the risk description, impact, probability, source, owner, mitigation actions, status and date. Therefore, options B and C are essential for recording risks, as they help to identify where the risk originates from and who is responsible for managing it. Option A is not relevant to recording risks, as it is the name of the tool used to document them. Option D and E are not relevant to recording risks, as they relate to the countermeasures or actions taken to address them, not the risks themselves.
A risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives. To ensure that risks are appropriately recorded, they should be documented in a consistent and structured way, such as using a RAID log (Risks, Assumptions, Issues and Dependencies). A RAID log should include information such as the risk description, impact, probability, source, owner, mitigation actions, status and date. Therefore, options B and C are essential for recording risks, as they help to identify where the risk originates from and who is responsible for managing it. Option A is not relevant to recording risks, as it is the name of the tool used to document them. Option D and E are not relevant to recording risks, as they relate to the countermeasures or actions taken to address them, not the risks themselves.
Question 2
The management of a chain of hotels has decided that one of its critical success factors (CSF) is to 'provide excellent customer service' The below measures have been suggested.
Which THREE of these are appropriate key performance indicators (KPIs) for the CSF 'provide excellent customer service'?
  1. The number of customers who make use of their in-room mini bar
  2. The percentage of customers who use the leisure facilities
  3. The number of customers who complain.
  4. The percentage of customers who join the hotel loyalty scheme
  5. The percentage of customers who return
Correct answer: CDE
Explanation:
A key performance indicator (KPI) is a measurable value that demonstrates how effectively an organisation is achieving a key business objective or critical success factor (CSF). A KPI should be relevant, specific, measurable, achievable, realistic and time-bound (SMART). Therefore, options C, D and E are appropriate KPIs for the CSF 'provide excellent customer service', as they measure aspects of customer satisfaction and loyalty that are directly related to the quality of service provided by the hotel chain. Option A is not an appropriate KPI, as it does not measure customer service, but rather customer consumption. Option B is not an appropriate KPI, as it does not measure customer service, but rather customer preference.
A key performance indicator (KPI) is a measurable value that demonstrates how effectively an organisation is achieving a key business objective or critical success factor (CSF). A KPI should be relevant, specific, measurable, achievable, realistic and time-bound (SMART). Therefore, options C, D and E are appropriate KPIs for the CSF 'provide excellent customer service', as they measure aspects of customer satisfaction and loyalty that are directly related to the quality of service provided by the hotel chain. Option A is not an appropriate KPI, as it does not measure customer service, but rather customer consumption. Option B is not an appropriate KPI, as it does not measure customer service, but rather customer preference.
Question 3
A report has been created into improving the scheduling of physio appointments at a major hospital An extract reads
'The scheduling team have a strong set of skills that will not need to be updated However, the team should be split into two. one dealing with inpatients and one with outpatients The introduction of a new telephony software and an online booking system will also require changes to the process'
How might these changes be BEST presented to communicate with the scheduling team'?
  1. Business Process Model
  2. Business Activity Model
  3. POPIT
  4. Prototype
Correct answer: D
Explanation:
A prototype is a simplified version of a proposed system or product that can be used to demonstrate its functionality and usability to the stakeholders. A prototype can be useful for communicating changes that involve new technology or software, as it allows the users to interact with the system and provide feedback. Therefore, option D is the best choice, as it would allow the scheduling team to see how the new telephony software and online booking system would work and how they would affect their process. Option A is not a good choice, as a business process model is a graphical representation of the activities, inputs, outputs and resources involved in a business process. It would not show how the new software would work or how the team would be split. Option B is not a good choice, as a business activity model is a high-level view of the business activities that take place within an organisation. It would not show the details of the scheduling process or the new software. Option C is not a good choice, as POPIT is an acronym for People, Organisation, Process, Information and Technology. It is a framework for taking a holistic view of a business situation, but it is not a tool for communicating changes.
A prototype is a simplified version of a proposed system or product that can be used to demonstrate its functionality and usability to the stakeholders. A prototype can be useful for communicating changes that involve new technology or software, as it allows the users to interact with the system and provide feedback. Therefore, option D is the best choice, as it would allow the scheduling team to see how the new telephony software and online booking system would work and how they would affect their process. Option A is not a good choice, as a business process model is a graphical representation of the activities, inputs, outputs and resources involved in a business process. It would not show how the new software would work or how the team would be split. Option B is not a good choice, as a business activity model is a high-level view of the business activities that take place within an organisation. It would not show the details of the scheduling process or the new software. Option C is not a good choice, as POPIT is an acronym for People, Organisation, Process, Information and Technology. It is a framework for taking a holistic view of a business situation, but it is not a tool for communicating changes.
Question 4
A company is reviewing its critical success factors and key performance indicators So far. it has key performance indicators for the following
The time to deliver orders for products Consumer satisfaction with products Wastage in product production The qualifications of production employees
Which area of Kaplan and Norton's balanced business scorecard has NOT been considered?
  1. Learning and growth
  2. Internal business process
  3. Customer
  4. Financial
Correct answer: D
Explanation:
Kaplan and Norton's balanced business scorecard is a strategic management tool that helps organisations to measure their performance across four perspectives: financial, customer, internal business process and learning and growth. The financial perspective focuses on how the organisation creates value for its shareholders and stakeholders. It includes measures such as revenue, profit, return on investment and cash flow. The customer perspective focuses on how the organisation meets the needs and expectations of its customers. It includes measures such as customer satisfaction, loyalty, retention and market share. The internal business process perspective focuses on how the organisation delivers its products and services to its customers. It includes measures such as quality, efficiency, productivity and innovation. The learning and growth perspective focuses on how the organisation develops its capabilities and competencies to achieve its goals. It includes measures such as employee skills, knowledge, motivation and empowerment. Therefore, option D is the correct answer, as financial measures have not been considered in the given list of key performance indicators. Option A is not correct, as learning and growth measures have been considered in the qualifications of production employees.Option B is not correct, as internal business process measures have been considered in the time to deliver orders for products and wastage in product production. Option C is not correct, as customer measures have been considered in consumer satisfaction with products.
Kaplan and Norton's balanced business scorecard is a strategic management tool that helps organisations to measure their performance across four perspectives: financial, customer, internal business process and learning and growth. The financial perspective focuses on how the organisation creates value for its shareholders and stakeholders. It includes measures such as revenue, profit, return on investment and cash flow. The customer perspective focuses on how the organisation meets the needs and expectations of its customers. It includes measures such as customer satisfaction, loyalty, retention and market share. The internal business process perspective focuses on how the organisation delivers its products and services to its customers. It includes measures such as quality, efficiency, productivity and innovation. The learning and growth perspective focuses on how the organisation develops its capabilities and competencies to achieve its goals. It includes measures such as employee skills, knowledge, motivation and empowerment. Therefore, option D is the correct answer, as financial measures have not been considered in the given list of key performance indicators. Option A is not correct, as learning and growth measures have been considered in the qualifications of production employees.
Option B is not correct, as internal business process measures have been considered in the time to deliver orders for products and wastage in product production. Option C is not correct, as customer measures have been considered in consumer satisfaction with products.
Question 5
AlpmeTrails is a company that specialises in offering tailored walking holidays The company was set up by two people, who each own 50% of the business AlpineTrails books hotels, transport and equipment to create bespoke holidays for AlpineTrails customers.
An agreement was recently reached with WalkNation. a national walking organisation, for AlpineTrails to provide a number of special holidays for its members These will be branded as WalkNation Holidays AlpineTrails will be responsible for organising the holidays but WalkNation will undertake the marketing and booking of these special holidays for its members
As well as customers, which THREE stakeholder groups are represented in this scenario?
  1. Owner
  2. Partner
  3. Supplier
  4. Manager.
  5. Competitor
Correct answer: ABC
Explanation:
A stakeholder is any person or group who has an interest in or influence over an organisation or project. Stakeholders can be classified into different categories based on their relationship with the organisation or project. One possible classification is the stakeholder wheel, which identifies six generic stakeholder categories: owner, partner, supplier, customer, regulator and competitor. Therefore, options A, B and C are correct answers, as they represent three stakeholder groups that are involved in the scenario. Owner refers to the person or group who owns or controls the organisation or project. In this case, it is the two people who each own 50% of AlpineTrails.Partner refers to the person or group who collaborates or cooperates with the organisation or project to achieve mutual benefits. In this case, it is WalkNation, who has agreed to work with AlpineTrails to provide special holidays for its members. Supplier refers to the person or group who provides goods or services to the organisation or project. In this case, it is the hotels, transport and equipment providers that AlpineTrails books for its customers. Option D is not a correct answer, as manager is not one of the generic stakeholder categories defined in the stakeholder wheel. Manager refers to the person or group who oversees or coordinates the activities of the organisation or project. In this case, it could be either one of the owners of AlpineTrails or someone appointed by them. Option E is not a correct answer, as competitor is not represented in this scenario. Competitor refers to the person or group who offers similar or alternative goods or services to the same market as the organisation or project. In this case, it could be another company that specialises in offering tailored walking holidays.
A stakeholder is any person or group who has an interest in or influence over an organisation or project. Stakeholders can be classified into different categories based on their relationship with the organisation or project. One possible classification is the stakeholder wheel, which identifies six generic stakeholder categories: owner, partner, supplier, customer, regulator and competitor. Therefore, options A, B and C are correct answers, as they represent three stakeholder groups that are involved in the scenario. Owner refers to the person or group who owns or controls the organisation or project. In this case, it is the two people who each own 50% of AlpineTrails.
Partner refers to the person or group who collaborates or cooperates with the organisation or project to achieve mutual benefits. In this case, it is WalkNation, who has agreed to work with AlpineTrails to provide special holidays for its members. Supplier refers to the person or group who provides goods or services to the organisation or project. In this case, it is the hotels, transport and equipment providers that AlpineTrails books for its customers. Option D is not a correct answer, as manager is not one of the generic stakeholder categories defined in the stakeholder wheel. Manager refers to the person or group who oversees or coordinates the activities of the organisation or project. In this case, it could be either one of the owners of AlpineTrails or someone appointed by them. Option E is not a correct answer, as competitor is not represented in this scenario. Competitor refers to the person or group who offers similar or alternative goods or services to the same market as the organisation or project. In this case, it could be another company that specialises in offering tailored walking holidays.
Question 6
IT services has commissioned a new desktop PC replacement project that has been funded and running for three months, with a fully-engaged sponsor and programme manager appointed
The head of IT services has not been involved beyond the initial project start-up interviews and has not attended any of the project meetings
What position on the power interest and does the head of IT services currently occupy?
  1. High power or influence but low interest
  2. Some power and influence and some interest
  3. High power or influence and high interest
  4. Low power and influence but high interest
Correct answer: A
Explanation:
A power/interest grid is a tool for analysing stakeholders based on their level of power or influence and their level of interest or involvement in the organisation or project. The grid has four quadrants: high power, high interest; high power, low interest; low power, high interest; and low power, low interest. The position of a stakeholder on the grid can help to determine the appropriate strategy for engaging and communicating with them.Therefore, option A is the correct answer, as the head of IT services currently occupies the high power, low interest quadrant. This means that he has the authority or ability to affect the outcome of the project, but he does not show much concern or involvement in it. Option B is not correct, as some power and influence and some interest would place the head of IT services in the middle of the grid, which is not a distinct quadrant. Option C is not correct, as high power or influence and high interest would place the head of IT services in the top right quadrant, which is not consistent with his lack of involvement. Option D is not correct, as low power and influence but high interest would place the head of IT services in the bottom right quadrant, which is not consistent with his authority.
A power/interest grid is a tool for analysing stakeholders based on their level of power or influence and their level of interest or involvement in the organisation or project. The grid has four quadrants: high power, high interest; high power, low interest; low power, high interest; and low power, low interest. The position of a stakeholder on the grid can help to determine the appropriate strategy for engaging and communicating with them.
Therefore, option A is the correct answer, as the head of IT services currently occupies the high power, low interest quadrant. This means that he has the authority or ability to affect the outcome of the project, but he does not show much concern or involvement in it. Option B is not correct, as some power and influence and some interest would place the head of IT services in the middle of the grid, which is not a distinct quadrant. Option C is not correct, as high power or influence and high interest would place the head of IT services in the top right quadrant, which is not consistent with his lack of involvement. Option D is not correct, as low power and influence but high interest would place the head of IT services in the bottom right quadrant, which is not consistent with his authority.
Question 7
A business case contains the following in its management summary:
'The recommended option meets the new regulatory requirements. It will ensure our products remain in the marketplace and be the first to receive compliance certification, which will enhance our reputation as the market leader
New business policies and processes will be introduced, which may temporarily reduce productivity. The action plan will be communicated to all staff at the next monthly meeting?
Which TWO categories of costs and benefits are described in this extract?
  1. Tangible costs
  2. Intangible costs.
  3. Tangible benefits
  4. Intangible benefits
  5. Irregular costs
Correct answer: BD
Explanation:
A cost is an expenditure or sacrifice incurred or expected to be incurred as a result of a business change. A benefit is an advantage or improvement that is gained or expected to be gained as a result of a business change.Costs and benefits can be classified as tangible or intangible, depending on whether they can be measured in monetary terms or not. Therefore, options B and D are correct answers, as they describe intangible costs and benefits that are not easily quantified or valued. Intangible costs include the temporary reduction in productivity due to the introduction of new business policies and processes. Intangible benefits include the enhancement of the company's reputation as the market leader due to being the first to receive compliance certification. Option A is not a correct answer, as tangible costs are not described in the extract. Tangible costs are those that can be measured in monetary terms, such as the cost of purchasing new equipment or hiring new staff. Option C is not a correct answer, as tangible benefits are not described in the extract. Tangible benefits are those that can be measured in monetary terms, such as the increase in revenue or decrease in expenses.
A cost is an expenditure or sacrifice incurred or expected to be incurred as a result of a business change. A benefit is an advantage or improvement that is gained or expected to be gained as a result of a business change.
Costs and benefits can be classified as tangible or intangible, depending on whether they can be measured in monetary terms or not. Therefore, options B and D are correct answers, as they describe intangible costs and benefits that are not easily quantified or valued. Intangible costs include the temporary reduction in productivity due to the introduction of new business policies and processes. Intangible benefits include the enhancement of the company's reputation as the market leader due to being the first to receive compliance certification. Option A is not a correct answer, as tangible costs are not described in the extract. Tangible costs are those that can be measured in monetary terms, such as the cost of purchasing new equipment or hiring new staff. Option C is not a correct answer, as tangible benefits are not described in the extract. Tangible benefits are those that can be measured in monetary terms, such as the increase in revenue or decrease in expenses.
Question 8
A business analyst is reviewing the stakeholder management strategy for a high profile Human Resources (HR) project Following an organisational restructure, Harvey's role has changed from Director of Operations to Director of HR and he has inherited sponsorship of the project Harvey was previously involved in the project, but had little interest because his focus was on the Operational Projects that he sponsored.
Which of the following sets of stakeholder management strategies represent appropriate approaches for Harvey; firstly, for when the project started and secondly now that his role has changed?
  1. Keep informed; Constant active management
  2. Ignore, Constant active management
  3. Watch, Constant active management
  4. Constant active management, keep informed
Correct answer: C
Explanation:
A stakeholder management strategy is a plan for how to engage and communicate with stakeholders based on their level of interest and influence in the organisation or project. A stakeholder management strategy can vary depending on the stakeholder's position on the power/interest grid, which has four quadrants: high power, high interest; high power, low interest; low power, high interest; and low power, low interest. Therefore, option C is the correct answer, as it represents appropriate stakeholder management strategies for Harvey based on his position on the grid before and after his role change. Watch means to monitor the stakeholder's level of interest and influence and keep them informed of relevant developments. This is suitable for when Harvey was in the low power, low interest quadrant, as he had little authority or concern over the project. Constant active management means to involve the stakeholder closely in the project and seek their input and feedback regularly. This is suitable for when Harvey moved to the high power, high interest quadrant, as he became the sponsor and owner of the project. Option A is not a correct answer, as keep informed means to provide the stakeholder with sufficient information and updates to maintain their interest and support. This is more suitable for when Harvey was in the low power, high interest quadrant, not the low power, low interest quadrant. Option B is not a correct answer, as ignore means to disregard the stakeholder's views and needs and exclude them from communication. This is not a good strategy for any stakeholder, especially one who has some power or influence over the project. Option D is not a correct answer, as constant active management means to involve the stakeholder closely in the project and seek their input and feedback regularly. This is more suitable for when Harvey was in the high power, high interest quadrant, not the low power, low interest quadrant.
A stakeholder management strategy is a plan for how to engage and communicate with stakeholders based on their level of interest and influence in the organisation or project. A stakeholder management strategy can vary depending on the stakeholder's position on the power/interest grid, which has four quadrants: high power, high interest; high power, low interest; low power, high interest; and low power, low interest. Therefore, option C is the correct answer, as it represents appropriate stakeholder management strategies for Harvey based on his position on the grid before and after his role change. Watch means to monitor the stakeholder's level of interest and influence and keep them informed of relevant developments. This is suitable for when Harvey was in the low power, low interest quadrant, as he had little authority or concern over the project. Constant active management means to involve the stakeholder closely in the project and seek their input and feedback regularly. This is suitable for when Harvey moved to the high power, high interest quadrant, as he became the sponsor and owner of the project. Option A is not a correct answer, as keep informed means to provide the stakeholder with sufficient information and updates to maintain their interest and support. This is more suitable for when Harvey was in the low power, high interest quadrant, not the low power, low interest quadrant. Option B is not a correct answer, as ignore means to disregard the stakeholder's views and needs and exclude them from communication. This is not a good strategy for any stakeholder, especially one who has some power or influence over the project. Option D is not a correct answer, as constant active management means to involve the stakeholder closely in the project and seek their input and feedback regularly. This is more suitable for when Harvey was in the high power, high interest quadrant, not the low power, low interest quadrant.
Question 9
A business analyst and a project manager are producing a business case for an initiative, which aims to improve the cyber defences of a large financial services provider
They met recently to review progress and made the following notes for the next draft
1. The benefits of cyber security will be hard to describe in quantitative terms, so we will need to describe these qualitatively.
2 We need to make it clear that we have fully explored the solution market, and we have considered a range of approaches to meeting the objectives of this project.
3. The threat posed to the organisation from cyber attack, and therefore the justification for this project, needs to be clearly articulated
Which THREE sections of a business case will cover these points'?
  1. Options considered
  2. Analysis of costs and benefits
  3. Description of the current situation
  4. Recommendations
  5. Risk assessment
Correct answer: ABC
Explanation:
A business case is a document that provides the rationale and justification for a proposed business change or solution. It helps to evaluate the benefits, costs, risks and impacts of different options and recommend the best one for further development and implementation. A business case typically consists of several sections, such as executive summary, description of the current situation, description of the desired situation, options considered, analysis of costs and benefits, risk assessment and recommendations. Therefore, options A, B and C are correct answers, as they cover the sections of a business case that will address the points noted by the business analyst and the project manager. Options considered is the section where different approaches or solutions to meet the objectives of the project are identified and described. It helps to show that a range of alternatives have been explored and evaluated. Analysis of costs and benefits is the section where the financial implications of each option are estimated and compared. It helps to show the expected value and return on investment of each option. Description of the current situation is the section where the problem or opportunity that motivates the project is clearly defined and articulated. It helps to show the justification and urgency for the project. Option D is not a correct answer, as recommendations is not a section of a business case that will address any of the points noted by the business analyst and the project manager. Recommendations is the section where the preferred option is selected and proposed based on the analysis and evaluation of other sections. Option E is not a correct answer, as risk assessment is not a section of a business case that will address any of the points noted by the business analyst and the project manager. Risk assessment is the section where the uncertainties and potential negative consequences of each option are identified and analysed. It helps to show how risks can be avoided, reduced or managed.
A business case is a document that provides the rationale and justification for a proposed business change or solution. It helps to evaluate the benefits, costs, risks and impacts of different options and recommend the best one for further development and implementation. A business case typically consists of several sections, such as executive summary, description of the current situation, description of the desired situation, options considered, analysis of costs and benefits, risk assessment and recommendations. Therefore, options A, B and C are correct answers, as they cover the sections of a business case that will address the points noted by the business analyst and the project manager. Options considered is the section where different approaches or solutions to meet the objectives of the project are identified and described. It helps to show that a range of alternatives have been explored and evaluated. Analysis of costs and benefits is the section where the financial implications of each option are estimated and compared. It helps to show the expected value and return on investment of each option. Description of the current situation is the section where the problem or opportunity that motivates the project is clearly defined and articulated. It helps to show the justification and urgency for the project. Option D is not a correct answer, as recommendations is not a section of a business case that will address any of the points noted by the business analyst and the project manager. Recommendations is the section where the preferred option is selected and proposed based on the analysis and evaluation of other sections. Option E is not a correct answer, as risk assessment is not a section of a business case that will address any of the points noted by the business analyst and the project manager. Risk assessment is the section where the uncertainties and potential negative consequences of each option are identified and analysed. It helps to show how risks can be avoided, reduced or managed.
Question 10
A business case is being created for a new. automated auditing system that will improve the IT department's ability to record and monitor all the computing devices used across the organisation
The sponsor of the project is keen to get a better idea of the financial implications of the project and has asked for the simplest calculation possible This calculation should consider the tangible costs and tangible benefits of the project, as well as showing when it will have saved the department as much money as it has cost.
Which of the following investment appraisal calculations has the sponsor asked for?
  1. Payback calculation
  2. Net present value
  3. Internal rate of return
  4. Discounted cash flow
Correct answer: A
Explanation:
An investment appraisal calculation is a technique for assessing whether a proposed business change or solution is financially viable and worthwhile. It helps to compare the costs and benefits of different options and select the best one based on objective criteria. There are different types of investment appraisal calculations, such as payback calculation, net present value, internal rate of return and discounted cash flow. Therefore, option A is the correct answer, as payback calculation is the simplest investment appraisal calculation that considers the tangible costs and benefits of a project, as well as showing when it will have saved as much money as it has cost.Payback calculation measures how long it will take for a project to recover its initial investment by comparing its cumulative cash inflows with its cumulative cash outflows over time. It helps to show how quickly a project will break even or generate profit. Option B is not a correct answer, as net present value is not the simplest investment appraisal calculation that considers only tangible costs and benefits. Net present value measures how much value a project will add or subtract from an organisation by comparing its present value of cash inflows with its present value of cash outflows over time. It helps to show how profitable a project will be in today's terms. Net present value requires discounting future cash flows using an appropriate discount rate, which adds complexity to the calculation. Option C is not a correct answer, as internal rate of return is not the simplest investment appraisal calculation that considers only tangible costs and benefits. Internal rate of return measures how efficient a project is by calculating its annualised effective compounded return rate or rate of growth over time. It helps to show how attractive a project is compared to other investment opportunities. Internal rate of return requires finding an unknown discount rate that makes net present value equal to zero, which adds complexity to the calculation. Option D is not a correct answer, as discounted cash flow is not an investment appraisal calculation itself, but a method for estimating future cash flows by applying an appropriate discount rate to reflect their present value. Discounted cash flow can be used in other investment appraisal calculations, such as net present value or internal rate of return.
An investment appraisal calculation is a technique for assessing whether a proposed business change or solution is financially viable and worthwhile. It helps to compare the costs and benefits of different options and select the best one based on objective criteria. There are different types of investment appraisal calculations, such as payback calculation, net present value, internal rate of return and discounted cash flow. Therefore, option A is the correct answer, as payback calculation is the simplest investment appraisal calculation that considers the tangible costs and benefits of a project, as well as showing when it will have saved as much money as it has cost.
Payback calculation measures how long it will take for a project to recover its initial investment by comparing its cumulative cash inflows with its cumulative cash outflows over time. It helps to show how quickly a project will break even or generate profit. Option B is not a correct answer, as net present value is not the simplest investment appraisal calculation that considers only tangible costs and benefits. Net present value measures how much value a project will add or subtract from an organisation by comparing its present value of cash inflows with its present value of cash outflows over time. It helps to show how profitable a project will be in today's terms. Net present value requires discounting future cash flows using an appropriate discount rate, which adds complexity to the calculation. Option C is not a correct answer, as internal rate of return is not the simplest investment appraisal calculation that considers only tangible costs and benefits. Internal rate of return measures how efficient a project is by calculating its annualised effective compounded return rate or rate of growth over time. It helps to show how attractive a project is compared to other investment opportunities. Internal rate of return requires finding an unknown discount rate that makes net present value equal to zero, which adds complexity to the calculation. Option D is not a correct answer, as discounted cash flow is not an investment appraisal calculation itself, but a method for estimating future cash flows by applying an appropriate discount rate to reflect their present value. Discounted cash flow can be used in other investment appraisal calculations, such as net present value or internal rate of return.
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