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When It Pays to Think Like a Finance Manager

Harvard Business Review

If you want approval for a new project — purchasing new equipment or computer systems, applying for a patent, building a new store — chances are you need your company’s finance department on board. To get the green light, it helps to understand how finance people think. Finance & Accounting Tool.

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A Refresher on Internal Rate of Return

Harvard Business Review

Any time you propose a capital expenditure, you can be sure senior leaders will want to know what the return on investment (ROI) is. According to Knight, it’s commonly used by financial analysts in conjunction with net present value, or NPV. Finance & Accounting Article. How is it calculated? Further Reading.

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Hospital Budget Systems Are Holding Back Innovation

Harvard Business Review

Despite a one-year payback period and a highly positive net present value (NPV) from this investment, the department will often reject the attractive opportunity. Instead, the finance office can allow the department to keep some of the savings it created, in excess of the original acquisition cost, in future year budgets.