Example of calculation and analysis of project performance indicators

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Let's look at common types of calculation and analysis.

Calculating NPV and IRR for a Business Idea
Let's consider a hypothetical situation: launching a new product - a smart watering system for indoor plants.

Initial data:

Initial investment: 5,000,000 rubles

Projected cash flows: Year 1: RUB 1,500,000 Year 2: RUB 2,500,000 Year 3: RUB 3,500,000 Year 4: RUB 4,000,000 Year 5: RUB 4,500,000

Discount rate: 12%

NPV calculation:

NPV = -5,000,000 + 1,500,000/(1.12)^1 + 2,500,000/(1.12)^2 + 3,500,000/(1.12)^3 + 4,000,000/(1, 12)^4 + 4,500,000/(1,12)^5

NPV = 5,332,046 RUB.

To calculate IRR, we use the iteration method or a special function in Excel. In this case, IRR is approximately 41%.

Interpretation of results and conclusions
NPV > 0: This means that the business idea will increase the company's value by 5,332,046 rubles at the given discount rate. A positive NPV value indicates the potential attractiveness of the idea.

IRR = 41%: This value is significantly higher than the discount rate (12%), indicating a high potential return on the idea. IRR can be interpreted as the maximum cost of capital at which the idea remains profitable.

Conclusions :

The business idea looks attractive from a value creation perspective.

A high IRR value implies a panama email list significant margin of safety.

An idea can remain profitable even if the cost of capital increases significantly or revenues decline.

Adjusting indicators based on risks
Now let's take into account the possible risks:

Risk of delayed market entry: may push all cash flows back a year.

Competition risk: may reduce revenue by 20% annually.

Risk of increased component costs: may increase initial investment by 10%.

Corrected data:

Initial investment: 5,500,000 rubles

Projected cash flows: Year 1: RUB 0 Year 2: RUB 1,200,000 Year 3: RUB 2,000,000 Year 4: RUB 2,800,000 Year 5: RUB 3,200,000 Year 6: RUB 3,600,000

New NPV calculation:

NPV = -5,500,000 + 0/(1.12)^1 + 1,200,000/(1.12)^2 + 2,000,000/(1.12)^3 + 2,800,000/(1.12) ^4 + 3,200,000/(1.12)^5 + 3,600 000/(1.12)^6

NPV = RUB 1,021,873.

New IRR value ≈ 18%

Interpretation of adjusted results:

The NPV remains positive, but has declined significantly. This means that even after taking risks into account, the idea still creates value, but its attractiveness has diminished significantly.

The IRR has dropped to 18%, but is still above the discount rate, indicating that the idea still has potential to be profitable, but the margin of safety has been significantly reduced.

The difference between the original and adjusted estimates shows how significant an impact risks can have on the attractiveness of a business idea.

Conclusions and recommendations:

Despite taking the risks into account, the idea still looks promising, but requires more careful planning and control.

It is necessary to develop strategies to minimize the identified risks:

Speed ​​up the development process and time to market.

Strengthen your marketing strategy to counteract competition.

Consider options for optimizing costs or finding alternative suppliers.


Conduct additional market research to refine revenue forecasts.

Consider a phased launch to reduce initial investment and generate revenue earlier.

Regularly review and update calculations as new information becomes available during the development of the idea.

This method of calculating and interpreting the most important indicators taking into account risks allows you to make more informed decisions and increases the chances of successfully implementing a business idea.