Interpreting the base case
You connect the positive base-case NPV to acceptance. This gives the recommendation a clear starting point.
Sentence 2“I would accept it because the result is positive.”
ACCA Performance Engine · Academy portfolio demo
Fictional, read-only demonstration. This is a prepared example. It does not perform live AI analysis and contains no real student data. No account is required.
From an answer
to a better next attempt.
Explore a fictional AFM response, see the evidence behind its feedback, then try the suggested improvement on paper. About 90 seconds.
1 · The practice attempt
Northstar Co · Investment decision
Fictional Northstar Co is considering a new production line. The supplied appraisal shows a positive base-case NPV. In a downside demand scenario the NPV falls below zero. The business has limited financing headroom.
Requirement: Evaluate the investment and recommend what management should do, using the appraisal, demand uncertainty and financing constraint. No calculation is required.
Read the fictional student answer
The investment produces a positive base-case value using the supplied cash flows. I would accept it because the result is positive. The downside case is lower, so management should consider risk before deciding.
2 · Prepared student report
Your answer, clearly diagnosed.
You recognise that a positive NPV supports acceptance. Your recommendation needs to explain what could change that decision: downside demand and limited financing headroom.
What you did well
What to improve
Developing the risk assessment
Exam technique‘Consider risk’ does not explain that the downside destroys value, or how limited financing headroom affects the decision. These scenario facts need to change or qualify your recommendation.
Sentence 3“The downside case is lower, so management should consider risk before deciding.”
3 · What to practise next
Turn “consider risk” into a decision.
Rewrite the final sentence using this chain: downside result → consequence for Northstar → condition before commitment. Include the financing constraint.
Success check: A reader can see why the downside matters and what management must check before investing.
Compare with an illustrative rewrite
The positive base-case NPV supports acceptance, but the downside demand case destroys value. Before committing, management should test demand assumptions and confirm that financing headroom can absorb the downside; acceptance should depend on those checks.
Authored coaching illustration, not a measured student improvement or official model answer.