article thumbnail

How to Quantify Sustainability’s Impact on Your Bottom Line

Harvard Business Review

We found that sustainable and deforestation-free practices created significant financial benefits for all players in the industry’s value chain. Specifically, our analysis found that the net benefits to ranchers ranged from $18 million to $34 million (12% to 23% of revenues) in net present value projected over 10 years.

article thumbnail

A Refresher on Payback Method

Harvard Business Review

There are a variety of ways to calculate a return on investment (ROI) — net present value , internal rate of return , breakeven — but the simplest is payback period. A Refresher on Net Present Value. How do companies use the payback method? What is payback period? Further Reading.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

How to Choose the Ideas Your Company Should Invest In

Harvard Business Review

My last post described how Innosight follows a three-stage process to evaluate investment proposals from outside entrepreneurs. But deciding how to invest in ideas at a corporation is a different beast. Note what isn't part of the decision: an idea's net present value or return on investment.

Company 14
article thumbnail

How to Improve Your Finance Skills (Even If You Hate Numbers)

Harvard Business Review

But having a grasp of terms like EBITDA and net present value are important no matter where you sit on the org chart. How can you boost your financial acumen? How do you decide which concepts are most important to understand to your work and your understanding of the business? The Refresher: Net Present Value.

article thumbnail

Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

Business students have traditionally considered net present value, payback period, and hurdle rates as necessary tools to determine which project to select. It’s also possible that we simply don’t know how to estimate the right parameters to make an options-based valuation work.

Report 8
article thumbnail

Why You Should Crowd-Source Your Toughest Investment Decisions

Harvard Business Review

Most companies – including the movie studios in Hollywood – over-rely on basic tools like discounted cash flow and net present value. How to Minimize Your Biases When Making Decisions. But it is possible to significantly improve your odds by understanding which decision-support tools work best for which decisions.

article thumbnail

Is Your Business Biased Against Innovation?

Strategy Driven

Many conventional metrics we use to estimate value are based on faulty assumptions. Net present value [NPV] is a case in point. You will learn how to identify and prioritize your company’s full portfolio of opportunities – from new product lines to entirely new businesses.