Project Selection – Internal Rate of Return
Definition Internal rate of return (IRR) is the interest rate at which the cash inflow and cash outflow of the project equals zero. You don’t have to understand that! Sample …
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Project Selection – Benefit-Cost Ratio
Definition Benefit-Cost ratio is the ratio of the benefits of a project compared to the costs calculated in terms of Present Value (PV). BCR > 1 – the project is …
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Project Selection – Opportunity Cost
Definition Opportunity Cost is the highest value a person needs to give up for the selected choice. For example, if you have US $10, you can either buy a coffee …
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Project Selection – Return on Investment
Definition Return on investment (ROI) is the benefit an investment bring about, by comparing profits in relation to capital invested. Sample Question An organization is considering several projects with the …
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Project Selection – Payback Period
Definition Payback Period is the time it takes for the organization to earn back the initial investment (in terms of monetary cost) to the project and begin making profits. Sample …
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Project Selection – Net Present Value (NPV)
Definition Net Present Value (NPV) of the sum of all cash inflows (in Present Value) of the project minus the initial cost, i.e. PV (benefits) – PV (costs) (Read more) …
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Present Value (PV) and Net Present Value (NPV)
Let’s get the formula for PV out of the way first as it will pave the way for a better understanding of the concept. Formula PV = FV / (1+r)n …
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What is Performance Measurement Baseline (PMB)?
Diving deep into the study for PMP you will definitely realize the importance of measurement be it the performance of the project or the project manager or the project team. …
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