2. ROI (Return of Investment)
The money that we invest in the company and its
return as profit or…
its mean investment gains compare favorably to
investment costs.
(Return From Investment - Initial Cost of Investment)
/ Initial Cost of Investment.
Example,If company invest rm 100,000 and end up
receive of rm 120,000 (20,000 benefit).. The annual
ROI will be 20% .
3. NVP (Net Present Value)
is used to analyze an investment decision and give
company management a clear way to tell if the
investment will add value to the company.
Formula : The present value of an
investment expected cash inflows minus the
initial investment.
If the result show positive value, the investment
should be made , otherwise it should not.
4. Payback Period
The amount of time required to recover the cost of an
investment.
By other mean, which is the initial cash outflow of an
investment is expected to be recovered from the cash
inflows generated by the investment.
Payback Period = Initial Investment / Annual
Cash Inflows.
Example, a $10000 investment which returned $1000
per year would have a 10 years payback period