Payback period analysis

• Payback period analysis evaluates projects by calculating the time required to pay back the investment,

• Payback period analysis has some advantages and can quickly screen out unviable investment options. However, it also has disadvantages, such as the inability to measure profitability and not taking into account time value.

present value analysis

• NPV analysis discounts the cash inflows and cash outflows associated with all investment projects and compares the difference between the two. If the NPV is greater than 0, the investment is accepted, otherwise it is not.

• Minimum Acceptable Rate of Return (MARR) refers to the minimum rate of return expected by an investor or company on an investment project. The IRR of an investment project must be greater than the MARR to be considered viable.

Total Application Cost (TCO)

• TCO is a calculation method used to evaluate the overall cost of a product or service over its entire life cycle and requires all cash flows to be discounted to a fixed point in time for comparison.