Just make sure your financial resources are leveled.
Also make sure to consider inflation and time value of money in your long term investment schedules.
But the cost of money in time varies. If today we put 1 dollar into a bank, for example, with an interest rate of 10 % annual (in a year), our investments will be 1 dollar 10 cents in a year and 1 dollar 21 cents after one more year. Hence, today the future cost of money is less, and the difference depends on the time of receiving the future money. If Net Present Value, received as a result of project cost and materials calculation, is positive, it means it is more favourably to invest capital in the project, than to put it into a bank and, therefore, project should to be executed. The higher is NPV, the more effective the project is. Negative NPV means that the project is actually unprofitable and, wagering money as deposit, is most probably will bring more income, than project execution.
Internal Rate of Return (IRR) is calculated in order to determine, with what discount rate project pays back. If IRR is higher than accepted discount rate, then project is attractive for the company, it will bring more incomes, than other investments. IRR is calculated by trial-and-error method of discount rate. This index does not have a sense for the projects of expenses, i.e., where there are no incomes. Value IRR is obtained as a result of solving the equation IRR=0. Consider using the Modified Internal Rate of Return MIRR.
Yes, you can. You can setup the Cost Account structure under the Enterpise -->Cost Accounts, base on the Project Cost Breakdown Structure (CBS). You also need to assigned Cost account to your activities such Project Expenses and preliminaries, Direct and Indirect cost, Plant and Equipment’s, Purchase Materials, equipment, instruments and other purchases. You also need to adopt the EVM principles.
Your setup will be depending on how detail you wanted to track your Project Financial Forecasting and Earned Value Management.
Member for
21 years 8 monthsJust make sure your financial
Just make sure your financial resources are leveled.
Also make sure to consider inflation and time value of money in your long term investment schedules.
Member for
14 years 5 monthsThank you so much sir!
Thank you so much sir!
Member for
19 yearsHi Suhaila,Yes, you can. You
Hi Suhaila,
Yes, you can. You can setup the Cost Account structure under the Enterpise -->Cost Accounts, base on the Project Cost Breakdown Structure (CBS). You also need to assigned Cost account to your activities such Project Expenses and preliminaries, Direct and Indirect cost, Plant and Equipment’s, Purchase Materials, equipment, instruments and other purchases. You also need to adopt the EVM principles.
Your setup will be depending on how detail you wanted to track your Project Financial Forecasting and Earned Value Management.