From a25e5877e7ac31e7a618c18dd76aa259825e3f54 Mon Sep 17 00:00:00 2001 From: Jet Hughes Date: Sun, 12 Jun 2022 14:17:30 +1200 Subject: [PATCH] vault backup: 2022-06-12 14:17:30 --- content/notes/25-cost-benefit-analysis.md | 19 ++++++++++++++++++- 1 file changed, 18 insertions(+), 1 deletion(-) diff --git a/content/notes/25-cost-benefit-analysis.md b/content/notes/25-cost-benefit-analysis.md index af9430ac5..a72412509 100644 --- a/content/notes/25-cost-benefit-analysis.md +++ b/content/notes/25-cost-benefit-analysis.md @@ -85,8 +85,25 @@ e.g., - payback period - how long until accumulated benefits equal the cost - NPV: sum of costs and benefits , but future years discouted - ![example](https://i.imgur.com/W6lhzKb.png) + - ![](https://i.imgur.com/rpOBYdc.png) - ROI: what is the discounted benefit relative to the costs + - ![](https://i.imgur.com/puvRpYm.png) + - ![](https://i.imgur.com/19rMyQa.png) + +# Example: what is better +- ![](https://i.imgur.com/nxMstV5.png) +- financial analysis isn't everything +- possible reasons to ignore a financial analysis + - organisational: ack of institutional will, or not aligned with strategy, or legislated requirement + - technical + - legal risk + - reputational risk + +# Comparing methods +- payback: ignores discounting; gives a *year* +- NPV considers discounting, give *net benefit* in financial terms, but ignores time and amount invested +- ROI considers discounting and amount invested, but ignored time period; gives a *percentage* - - +![summary](https://i.imgur.com/rnBdIfg.png)