Harvard Business Review

MARCH 17, 2016

The IRR is the rate at which the project breaks even. According to Knight, it’s commonly used by financial analysts in conjunction with net present value, or NPV. With NPV you assume a particular discount rate for your company, then calculate the present value of the investment ( more here on NPV ).

Rate of Return 8

Rate of Return IRR NPV Net Present Value 8

The Idolbuster

JANUARY 17, 2013

Ever been on a project that is under time pressure to make a launch date? Sabina” was a product manager working in lifescience industry who was part of a project that had to make that very choice. Sabina explained that she felt “pressured to show there is value in doing the project, a positive NPV.

NPV 36

NPV Sample Project Metrics 36

Harvard Business Review

DECEMBER 2, 2010

The higher level of uncertainty associated with H2 and H3 necessitates an updated valuation methodology that takes into account more than the net present value (NPV) of the target. The two together, NPV + OV, provide an inclusive but not inflated valuation. We call this the Opportunity Value (OV) of an asset.

NPV 14

NPV Net Present Value Price Engineering 14

Harvard Business Review

MARCH 23, 2015

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. But finance people like me are skeptical even when the proposals do project a return. Here’s why. Excerpted from.

Finance 8

Finance NPV CFO ROI 8

Harvard Business Review

APRIL 19, 2011

Clearly the company was painfully aware of these two failed projects. The CEO and CFO responded with, "A failure to hit ROI and NPV targets." In interviews with a dozen senior managers from a large company, two particular failures came up over and over again. The problem came with the follow-up question, "Why did example A fail?".

NPV 15

NPV ROI CFO Consensus 15

Harvard Business Review

JANUARY 21, 2016

Today large commercial buildings address only two percent per year of the NPV-positive investments in efficiency that are available to them. Fast (a project lasting less than a year), Capital-light (or better yet, funded by low-cost capital provided by a third party).

NPV 8

NPV Energy Efficiency Technology 8

Harvard Business Review

OCTOBER 20, 2014

Combining these creates a P&L and a projection, which through a discounted cash flow analysis yields an NPV, which can be used to assess valuation. On the cost side, what’s the sourcing cost, the production cost, and the distribution cost? Which of these are ongoing, and which are one-off?

Discounted Cash Flow 8

Discounted Cash Flow P&L NPV EBITDA 8