Chapter 20

Project Analysis and the Business Case

When we decided to use return on investment (ROI) and other financial ratios examined in the previous chapter to analyze and select investment projects in our organization, we integrated purely economic criteria and reasoning that corporate management knows and commonly uses in their work. We can now also express projects in terms of business and in a language that is closer to how management thinks. We do this as a means to facilitate understanding and to allow us to anticipate conclusions and reasoning coming from management to justify the decisions.

To use this language of management, we may have to use indexes such as ROI, net present value (NPV), and internal rate of return (IRR). This ...

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