Proven Portals: Best Practices for Planning, Designing, and Developing Enterprise Portals

Tools for Analyzing Capital Expenditures

No single measure is generally accepted as the best way to measure the value of an expenditure, but several are used in various combinations depending on organizations' needs. The most common measures are the following:

• Present value

• Net present value

• Payback period

• Return on investment

• Internal rate of return

Each of these is described below along with its advantages and disadvantages.

Present Value

The amount of money available to you now is worth more than the same amount of money available to you a year from now. The reason is that you can invest that money and earn interest or increase the value of an equity. This is the basic idea behind present value. A sum of $1,000 invested today at 10% annual interest ...