Project Selection Calculations: ROI, Payback Period, and NPV is a free illustrated PDF handbook for project managers who need to compare investment proposals. It explains what each measure tells you, how to calculate it and why the project with the fastest recovery or highest percentage return is not always the one that creates the most financial value.
The handbook uses a consistent forest-green and gold handwritten notebook design. Formulas, cash-flow examples and interpretation notes are presented together. The opening page applies three measures to the same investment, making the differences between total return, cash recovery and discounted value visible from the start.
What you will find in this ebook
Build the model and calculate return
Define the relevant incremental cash flows, initial investment and project horizon before calculating a result. Distinguish cash-based ROI from other return conventions, exclude sunk costs from a new decision and compare the effects of project size and timing. Worked examples show why a percentage alone can give an incomplete ranking.
Understand recovery time and discounted value
Calculate payback for regular and uneven receipts, with explicit assumptions about whether cash arrives monthly, throughout a year or only at year-end. Learn present value, discounted payback and NPV using both equal and changing cash flows. Separate effective rates from quoted nominal rates, and match inflation assumptions with the discount rate.
Choose between realistic alternatives
The later pages cover working-capital recovery, terminal costs, mutually exclusive projects and alternatives with different useful lives. A capital-limit example shows how selecting the highest profitability index can miss the better combination of indivisible projects. Break-even cash flow, sensitivity analysis and an integrated comparison help turn calculations into a documented recommendation.
How to use the handbook
Start with a dated cash-flow forecast and a clear decision: accept a stand-alone project, choose one alternative or assemble a portfolio within a budget. Identify the relevant calculation, then replace the example inputs with supported project estimates. Keep the units, signs, timing and definition of return visible.
Use the spreadsheet page to check Excel NPV and XNPV formulas, especially the treatment of the initial payment. Then review the result beside funding limits, capacity, downside scenarios and strategic requirements. Recalculate when the forecast or required return changes. The PDF is a reference and learning guide; it does not automatically calculate results or replace an approved business case.
Who this ebook is for
This guide is useful for project managers, PMO analysts, business-case contributors and learners who want a practical explanation of project-selection calculations. It is especially relevant when several proposals compete for funding or when stakeholders need a clear explanation of why ROI, payback and NPV lead to different conclusions.
Inside the PDF
The download contains 23 pages: one cover, 20 numbered content pages and two advertisements. The templates advertisement follows content page 5, and the Coursera Plus advertisement follows content page 15. The PDF includes navigation bookmarks, searchable text, clickable promotional links and primary references from HBS Online, OpenStax, Microsoft and ACCA.
View the complete contents
- One investment. Three answers.
- Build the cash-flow model first
- Simple ROI: define the calculation
- A higher ROI may add less value
- Payback with regular cash receipts
- Payback with uneven cash flows
- Discounted payback may never occur
- Time value of money: move to one date
- NPV with equal annual cash flows
- NPV with uneven cash flows
- Match the rate to the cash flows
- Include the cash released at the end
- Independent or mutually exclusive?
- Compare different useful lives fairly
- Choose projects within a capital limit
- Find the break-even annual cash flow
- Sensitivity and scenarios reveal fragility
- Spreadsheet checks: NPV and XNPV
- Integrated case: the faster project may lose
- Formula desk reference and sources
Related project management ebooks
For a wider reference, read Essential Project Management Formulas. Build the cost forecast with Cost Estimation and Budgeting Formulas. Explore uncertainty in Risk Calculations, and check staffing assumptions with Resource Calculations.
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Frequently asked questions
Can a project have positive ROI but negative NPV?
Yes. Simple ROI uses the total modeled gain relative to the investment without discounting. NPV also reflects the dates of cash flows and a required return. The opening worked example shows a positive total-period ROI alongside a slightly negative NPV.
Is this project selection PDF free to download?
Yes. You can download the English-language handbook directly from this page without creating an account. It contains worked examples and spreadsheet formula guidance rather than an editable workbook.
Does the handbook contain advertisements?
Yes. It includes a project-management templates advertisement and a Coursera Plus advertisement. The links are optional, and no purchase is required to use the handbook. Promotional links may generate a commission for WikiFree.