Solverboard considers your project cost (including risk budget) with your financial projections (benefits) to provide indicative investment appraisal metrics.
Please note, these are provided as a guide only and we recommend consulting your project accountant to evaluate and verify these metrics when using to make informed decisions.
Investment Appraisal Techniques
The investment appraisal techniques presented in the platform are:
Net Cash Flow: this is the sum of the annual net benefits over the defined period, as an examples sales less cost of sales.
Net Present Value (NPV): this is the total of discounted net cash flow less the initial investment (the project cost) representing the net benefit of undertaking the project.
Return on Investment (ROI): Expressed as a percentage is the return generated from the investment, calculated as:
(Cumulative Net Cash Flow – Project costs) / Project Cost * 100
Payback Period: The time in years it takes for net cash flow to equal the project cost.
Investment cost: this refers to the initial investment required to conduct the project and produce the project’s products (output) eg the project cost (including an allowance for risk).
Financial projections: this refers to financial benefit assessed over a defined investment period. The financial benefits are the net benefit of the total value received less the cost of ongoing operations for examples sales revenue less cost of sales (net cash flow).
Discounted cash flows: this is the net cash flow at a discounted rate to express the future value of money in current terms. Solverboard does not present discounted cash flows but uses it in the Net Present Value calculation. Your discount rate can be changed in platform settings.