Gary Lloyd – Project Management Skills #1 – Financial Appraisal with NPV
How to decided whether your project is worth doing from a financial perspective
If a project costs $1.2 million in year 1 and generates revenue of $400,000 in each subsequent year, how many years does it take to break even?
If you answered 5 years (including year 1) then you probably need to take this course because it’s likely that this project loses money over that five year period.
The problem with break-even analysis and Return on Investment (ROI) calculation is that they usually ignore the fact that $1,000 in one year’s time is not equivalent to the same amount today, That’s because the money could be invested in a different way, brining interest rates into play.
the only sound way to determine whether a project is financially viable, is by calculating the project’s Net Present Value. This project will teach you:
Why Future Value does not equate to Present Value.
How to Calculate Present Value.
How to calculate Net Present Value across a number of year.
Why Return on Investment, Break-even and Internal Rate of Return can be misleading
What other types non-monetary value you can consider.
If you already have a good grasp of Net Present Value, Discounted Cashflow or Time Value of Money then this course is not for you. If, however, any of the terms make your stomach feel queasy then this course is for you.
Net Present Value is one of this things that is obvious when you understand but baffling until that moment when the “penny drops”. This course aims to get that penny to drop for you.
Net Present Value is explained in 4 short, core videos (not including introductory and summary videos) using examples and exercises. Each exercise has a downloadable spreadsheet, containing the calculations to get the answers.
In addition, there 2 additional optional videos, one covering Internal Rate of Return and Return on Investment, and another video on the treatment of inflation.
And there are a further two bonus videos, taken from my Lean Project Management course, that discuss non-financial types of value and the role of emotion in value.
Project Management Skills #1 – Financial Appraisal with NPV: Videos, PDF´s, Template
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