Returns on Project Requests

This introduction article will help users understand how returns are calculated for project requests.

Overview

This article describes how the project request’s returns are calculated exactly giving the formula used by TeamDynamix to make this calculation.

Where to Find This

This feature appears in the TDClient and TDNext interfaces.

Navigate to Returns following these paths:

• TDClient > Services > Project Requests > [select request] > Returns
• TDNext > Portfolio Planning > [select request] > Returns
• TDNext > Projects > [select project] > Returns

Using Returns

Calculating Returns for Project Requests

1. The cost of the project will be initially filled out from information entered in the Forecast tab. To continue, enter the estimated income per period.
2. Select the period type.
3. Then select the number of periods it might take to complete.
4. Click the Calculate button to continue.
5. The Return on Investment and Payback Period fields will populate. The payback period is simply the Cost divided by the Estimated Income per Period fields. Return on Investment is calculated using the arithmetic method below. Note: Estimated Income per Period is a required field.

V_i is the initial investment or the cost of the project while V_f is the final value of the investment, or the estimated income per period multiplied by the number of periods selected.

6. Several fields will display in the lower half of the window. These fields represent each period, from 0 to the number selected in the Periods field. This information is used to calculate the Net Present Value (NPV) and Internal Return Rate (IRR). These fields are initially populated with guesses based upon the data entered in step 1. When you have entered the values for each period, click the Calculate button to preview the values or the Save button to store them for later. Note that there is an initial period for NPV and IRR calculations, in which it is likely they will have $0 income and a much higher cost (i.e. the initial capital costs of a project). To perform like Excel, make the period's income and cost be 0.

C_t is the cash flow at a given period called t. i is the discount rate as entered in the Discount Rate field, defaulting to 10%. IRR is i that occurs when NPV is set to 0.