Financial management

Preparation for CA2 and final exam

CA2 will last 1 hour. It is scheduled for the 21/11.

Authorised equipment: calculator

You will find here some examples of questions for CA2 (but also for your final exam).

1. What are the five steps to measure impact, based on the theory of change and Clark et al. ?

2. What is the difference between measuring and valuing (for the steps of measuring impact based
on the theory of change)?

3. Give three examples of impacts of social and environmental challenges on financial departments?

4. Carbon footprint calculation

NAME Type Emission factor (kgCO2eq / ton) Price / ton

Plastic (PET) new 3 270 $ 1,162
Plastic (PET) recycled 202 $1,766
Source: base Carbone for emission factors

PET Plastic.

A company uses 24 tons of Plastic PET per year. So far, they use only new material.
What would be the impact in cost and in carbon emissions per year if they use 25% of recycled one? 50%?
The State plans to implement a carbon tax ($50/tCO2eq/year). Taking into consideration this new tax, what is for
the company the difference in price per ton of plastic between new and recycled PET?

5. Quote two tools that can be used to measure environmental impact (or outcome) of the company and
specify what this tool if focused on?

6. What are the four steps to carry out an environmental LCA ?

7. You attended a conference in which one speaker presents the notion of “living wage”. Please write a
short note to explain to your colleagues what it is and why it could be interesting for your company to
select suppliers who complies with “living wage”.

8. What are the different stages of capital budgeting?

 9. Which method enables to take into account when the investment is recouped (recovered)?

10. Which of these methods take into account time value of money?

Payback period
Accounting rate of Return
Net Present Value
Internal rate of return

11. Which indicator answers to this question “What is the profitability of the project with respect to
its impact on operating profit?

12. A company wants to invest in a project, whose initial cost €300,000 and expected equal annual net
cash flows of €40,000
What is the payback period of this project?

13. Calculate the accounting rate of return and payback period of these 2 projects. Based on these two
indicators which project is the best? What could the company also take into consideration to select
between the two projects?

Data are in euros.

Project 1
Initia l inve stm e nt 45 000
Pro je c t 1 / Ye a r 1 2 3 4 5 6 To ta l
Ne t c a sh flo w -3 000 -3 000 10 000 11 000 12 000 52 000 79 000
Ac c um ula te d ne t c a sh flo ws -3 000 -6 000 4 000 15 000 27 000 79 000
De p re c ia tio n e xp e nse -7 500 -7 500 -7 500 -7 500 -7 500 -7 500 -45 000
Op e ra ting inc o m e -10 500 -10 500 2 500 3 500 4 500 44 500 34 000

Pro je c t 2
Initia l inve stm e nt 68 000
Ye a r 1 2 3 4 5 6 To ta l
Ne t c a sh flo w 0 0 0 25 000 45 000 45 000 115 000
Ac c um ula te d Ne t c a sh flo ws 0 0 0 25 000 70 000 115 000
De p re c ia tio n e xp e nse -11 333 -11 333 -11 333 -11 333 -11 333 -11 333 -68 000
Op e ra ting inc o m e -11 333 -11 333 -11 333 13 667 33 667 33 667 47 000

14. What is the future value of an an investment of €20,000 at a rate of 3% for 5 years (round to the
nearest euro) ?

15. Based on question 13, calculate the net present value of the two projects with a discount rate of 3%.

16. Give two reasons why financial teams should be involved in the process of valuing human capital?

17. Scoring

A garment company implements a new strategy and defines new indicators to select its projects. Before inviting
decision-makers to a meeting to decide in which project to invest, you are asked to test the new scoring process.
The company has already rejected all projects with an initial cost that is too high. The company aims to reduce
its carbon footprint and water consumption. All projects were scored on a scale out of 4 for each indicator.

Sc o re o u t o f 4 fo r e a c h c rite ria Pro je c t 1 Pro je c t 2 Pro je c t 3 Pro je c t 4

Sc o ring fo r NPV 4 3 2 2
Sc o ring fo r pa yba c k pe rio d 4 3 4 2

Sc o ring fo r GHG e missio ns 2 4 1 4

Sc o ring fo r wa te r c o nsumptio n 2 0 2 4
Sc o ring fo r jo b c re a tio n 0 3 3 1

Calculate the score out of 20 for all projects with weight 1 and 2:

We ig ht 1 We ig ht 2
20% 15%

30% 15%

30% 30%
10% 30%
10% 10%
100% 100%
Which project will be selected with equivalent weight for all indicators?
Which one with weight 1? Weight 2?

18. A medium-sized company would like to use the sustainable balance scorecard to monitor its strategy.

Write a short note to explain what the sustainability balance scorecard is and give an example of two objectives
and related indicators (one or two) to assess the objective for two perspectives.