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Cases

Ohjelma
Bike Lease Finland

Bike Lease Finland

Leasing and maintenance of employee bicycles, digital services.

Ohjelma
Excelence Solutions

Excelence Solutions

Consulting and data analytics, expert services and consulting.

Ohjelma
Finnish Timber Oy

Finnish Timber Oy

Ecological log buildings and construction site processes, project business.

Ohjelma
Green Scape

Green Scape

Customized green wall services for B2B clients, service business.

Ohjelma
Marine Craft

Marine Craft

Customized motorboats, project delivery, manufacturing industry.

Ohjelma
Scandinavian Design

Scandinavian Design

Leasing and maintenance of company bicycles, digital services.

Task

Investment Calculation



In this task, the student creates an investment calculation for a planned acquisition by a case company, such as new equipment, software, or premises. They assess the cost of the investment, the annual savings and additional revenues generated, and calculate the payback period. Additionally, the student considers the profitability of the investment and associated risks and prepares a brief recommendation for the company's management. The task helps to understand the financial justification of investment decisions in a practical way.

Learning objectives

After completing the task, the student:
1. Can describe the investment needs of the case company and select a suitable investment target.
2. Can identify the key costs of the investment and the annual cash flows (savings and additional revenues).
3. Can prepare a simple investment calculation and assess the payback period.
4. Understands how the profitability and risks of the investment are evaluated in a practical business situation.

Step by step

  1. Investment calculation

    Objective:
    The objective of the assignment is that the student is able to prepare a simple investment calculation for the case company for one planned acquisition and assess its payback period and profitability. The aim is to understand how the costs of an investment and the benefits it generates can be compared over time.

    Materials:

    • The selected case company description from the learning material.

    • The assignment is based on the information in the case description and on moderate, logical assumptions about the investment’s price, useful life and the savings or additional revenue it generates.

    Assignment steps (instructions for the student):

    1. Choose the investment target and describe the situation
      Select one clear investment for the case company, for example a new device, software, vehicle or premises.
      Describe in 5–8 sentences:

      • what is being acquired and what it is needed for

      • what problem or need the investment aims to address

      • what would happen if the investment were not made (challenges of the current situation).

    2. Estimate the acquisition cost and other initial expenses
      Prepare a well-grounded estimate of the investment’s purchase price (an approximate figure is sufficient, exact numbers are not required).
      Also consider any other initial expenses, such as installation, commissioning training or facility modifications.
      Write briefly what your assumptions are based on (e.g. “I assume the device costs about X because…”).

    3. Identify the cash flows generated by the investment (savings and additional revenue)
      List 3–5 points where the investment provides annual benefits for the case company. These may include, for example:

      • cost savings (less manual work, lower maintenance costs, energy savings)

      • additional revenue (more sales, better capacity, new services).
        Estimate the magnitude of each benefit on an annual basis (e.g. “I estimate that 10 hours/month of working time is saved, which corresponds to about X €/year”). Briefly justify your assumptions.

    4. Prepare a simple investment calculation and calculate the payback period
      Describe in text form how the annual net impact of the investment is calculated:

      • annual benefits (savings + additional revenue)

      • minus any annual additional costs (e.g. maintenance contract, licence fee).
        Calculate an estimate of the payback period: in how many years the investment “pays for itself” when the cumulative annual net returns equal the initial investment. Present the calculation verbally and, if necessary, with simple example figures.

    5. Assess the profitability and risks of the investment
      Write about ½–1 page in which you answer:

      • whether the investment appears profitable based on the payback period (e.g. whether the period is short or long relative to its useful life)

      • what key risks are associated with the investment (e.g. uncertainty of demand, technological obsolescence, unexpected cost increases)

      • how the company could reduce these risks (e.g. phased acquisition, piloting, careful contracting).

    6. Prepare a brief recommendation for management
      Finally, write a 5–7 sentence summary and recommendation that could be presented to the case company’s management:

      • summarise the purpose of the investment and the estimated payback period

      • state the key reason why the investment should or should not be made

      • highlight one condition or check that should be carried out before the final decision (e.g. offer comparison, test period).

    Submission and evaluation:
    Submit a text of about 1–2 pages that shows:

    • the selected investment target and its background

    • the estimate of the acquisition cost and initial expenses

    • the annual benefits and possible additional costs of the investment

    • the simple investment calculation and the estimated payback period

    • the reflection on profitability and risks as well as a clear recommendation for management.

    Evaluation focuses on how well:

    • you identify the costs and benefits of the investment

    • you construct a logical and understandable investment calculation

    • you assess the payback period and profitability realistically based on the case description

    • you highlight essential risks and are able to present a clear conclusion.

    Recommended working time: approximately 60 minutes, individually or in pairs.

Tasks by audience and theme

University of applied sciences

Polytechnics and higher education studies.

68 tasks