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Understanding metrics: NPV versus ROI

Notes and Reports
February 2008 - Report I21

THE BOTTOM LINE

Net Present Value (NPV) and Return on Investment (ROI) are two valuable metrics with different uses. ROI is a comparison metric appropriate for assessing a technology investment, while NPV should not be used for comparing projects or assessing project viability. Without an accurate estimate of residual value, the NPV result will be artificially low.

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Topic: IT Management & Operations
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Function: Executive Management

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