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Business case guide FAQ > Business case finance > Return on investment calculation and ROI calculators

Search the glossary for business case terms often ill-defined, confused, or prone to misinformation:

The typical method is benefits divided by costs, usually, over a three-year period. This is a reasonable back-of-the-envelope calculation, but dangerous for a serious investment decision. Reasons:

  • Cash flows undiscounted, so, no accounting for time and risk
  • No charge for capital. Capital always want a return.
  • Understates economic life of most technologies. It's more than 3 years.

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