Project Management
Financial considerations are often an important consideration in selecting projects
Three primary methods for determining the projected financial value of projects:
Net present value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time. The higher the net present value the better.
Return on investment (ROI) is calculated by subtracting the project costs from the benefits and then dividing by the costs. The higher the return on investment the better.
ROI = (total discounted benefits - total discounted costs) / discounted costs
The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the net dollars invested in a project