Fred Brisbois, Sikorsky Aircraft Corp. and Larry Buehler, FAA ... - IHST

WHAT THE HELL DO WE KNOW ABOUTFINANCE?Return on Investment (ROI): This is calculated by dividing the net present value by the presentvalue of the project costs. The net present value is calculated by subtracting the present value ofproject costs from the present value of project benefits. The model calculates ROI based oncosts, benefits, and the discount rate that are entered by the user.ROI =t∑i=1⎡⎢⎢⎣( B − C )( 1+n)t∑i=1ii( 1+r)i( 1+n)⎡Ci⎢i⎣⎢ ( 1+r)i⎤⎥⎦⎥i⎤⎥⎥⎦=t∑i( + ) ⎤ t1 n ⎡C( 1 n)⎡Bi⎢ ⎥⎣⎢ +⎦⎥ − +∑i⎢i( 1 r) i ⎣⎢ ( 1+r)t ⎡iC( + n)⎤∑i 1⎢ ⎥ii=1 ⎣⎢ ( 1+r)⎦⎥i= 1 = 1ii⎤⎥⎦⎥WE KNOW ROISHI !IHSS – September, 2009IHST.org22