AI Investment Justification CAIPM Practice Questions (Page 4)

Questions 16–20

1. 16foundation · easy

   What is the purpose of proposing mitigation strategies for AI investment risks?

   • ATo eliminate all possible risks from the project
   • BTo reduce the likelihood or impact of identified risks
   • CTo guarantee the project will be profitable
   • DTo increase the initial project budget
   Reveal Solution Discussion Select an answer first
2. 17expert · hard

   A company is evaluating an AI project with an initial investment of $500,000. The expected cash flows are $150,000 per year for the first three years and $100,000 per year for the next three years. The company's required rate of return is 12%. What is the Net Present Value (NPV) of this project, and should the company proceed?

   • ANPV is positive, so proceed.
   • BNPV is negative, so reject.
   • CNPV cannot be determined without the payback period.
   • DNPV is zero, so the decision is indifferent.
   Reveal Solution Discussion Select an answer first
4. 18application · medium

   A healthcare provider is proposing an AI system that predicts patient readmission risk. The financial ROI is modest, but the system is expected to significantly improve patient outcomes and reduce readmission rates, which aligns with the organization's mission. The CFO is skeptical because the financial benefits are not immediately apparent. How should the program manager present the investment case to secure approval?

   • AArgue that the AI system is essential for innovation and should be approved regardless of cost.
   • BPresent a balanced case that quantifies financial benefits where possible and clearly articulates the intangible benefits such as patient satisfaction and reputation.
   • CFocus only on the financial ROI and downplay intangible benefits to avoid appearing unrealistic.
   • DDelay the proposal until more financial data is available, even if it means missing the strategic window.
   Reveal Solution Discussion Select an answer first
5. 19foundation · easy

   What is a key element of a compelling business case for an AI project?

   • AA clear link between the AI project and organizational goals
   • BA guarantee of zero project risks
   • CA list of all possible AI vendors in the market
   • DA detailed technical architecture diagram
   Reveal Solution Discussion Select an answer first
6. 20foundation · easy

   Which of the following is an indirect cost that should be included in the TCO of an AI system?

   • ACost of electricity for running data centers
   • BOpportunity cost of employees' time spent on training and change management
   • CCost of GPU hardware for model training
   • DSalaries of data scientists developing the model
   Reveal Solution Discussion Select an answer first