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APMG-International Better-Business-Cases-Practitioner Exam - Topic 4 Question 42 Discussion

Using the Scenario, answer the following questions about the Financial Appraisal of the option to build a new campus onthe site of the Old Fire Station Headquarters.Decide whether the action taken represents an appropriate application of the Five Case Model for this project and select the responsethat supports your decision.The cost of inflation is estimated to be 2% per annum.Should the project manager use this information when preparing the Financial Appraisal for this scheme?
C) Yes, because the Financial Appraisal should include the cost of inflation.
A) No, because the Financial Appraisal should include constant or real prices.
B) No, because the Financial Appraisal should exclude the cost of general inflation and depreciation.
D) Yes, because inflation will reduce the cost of the scheme over time.

APMG-International Better-Business-Cases-Practitioner Exam - Topic 4 Question 42 Discussion

Actual exam question for APMG-International's Better-Business-Cases-Practitioner exam
Question #: 42
Topic #: 4
[All Better-Business-Cases-Practitioner Questions]

Using the Scenario, answer the following questions about the Financial Appraisal of the option to build a new campus on

the site of the Old Fire Station Headquarters.

Decide whether the action taken represents an appropriate application of the Five Case Model for this project and select the response

that supports your decision.

The cost of inflation is estimated to be 2% per annum.

Should the project manager use this information when preparing the Financial Appraisal for this scheme?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Deeanna at May 27, 2026, 11:34 PM

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Remedios
1 day ago
Yes, the Financial Appraisal should definitely include inflation costs.
upvoted 0 times
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Rolland
7 days ago
I recall a case study where inflation was a key factor in project viability. So, I’m inclined to think we should include it, which points to option C again. But I wonder if there are exceptions?
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Adelina
12 days ago
I feel like excluding inflation could lead to underestimating costs, so I’m also thinking C is the right choice. But I’m a bit confused about the implications of depreciation mentioned in option B.
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Alberto
17 days ago
I’m not entirely sure, but I remember a practice question where we discussed real vs. nominal prices. Maybe option A makes sense if we’re looking at constant prices?
upvoted 0 times
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Nilsa
22 days ago
I think the Financial Appraisal should definitely consider inflation, so I’m leaning towards option C. It seems important to account for rising costs over time.
upvoted 0 times
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