CCBA® and CBAP® Certifications Study Guide

Financial calculations

There are a few key financial calculations that you must be able to practically apply and understand.

These calculations include the following:

• Return on Investment (ROI): This is expressed as a percentage of the net benefits divided by the cost of the change. The formula to calculate ROI is as follows:

ROI = (Total Benefits - Cost of Investment)/Cost of Investment) x 100

An example is as follows:

ROI = ($300,000 - $200,00)/($200,000) X 100 = 50%

• Discount rate: This is the assumed interest rate used in present value calculations. This value is determined by the organization and made available for any Present Value (PV) calculations.
• PV: This calculates the present-day value of the expected benefits. PV is expressed ...