Project Management Basic Key Terms - Part II (Project Defining)
Net present value: The value in present dollars of all cash flows expected in the future from a project.
Internal rate of return: The percentage rate at which the project will bring a return on the investment.
Payback period: Also known as time to money or breakeven point, the number of months or years the project will take to recover the original investment.
Cash hole: Also known as the maximum exposure, the most money that will be invested in the project at any point.
Useful life: The period of time over which the financial analysis will be conducted. Although it’s related to factors such as the anticipated working life of an asset or the expected size of a market window, it’s actually a value that your accounting department establishes.
Discounted Cash Flow: A calculation of the present value of a projected cash flow based on some assumed rate of inflation or interest.
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