20/1/2012

The figure below show us the cost-benefit analysis of our solar panel project. First of all, the depreciation of the cost will be 25 years. Hence the monthly cost will be around $2772, the revenue that we gain will be around $5561.33. The productivity gain will be $3500 and the better recognition for more customers will be $5000. Therefore, we can calculate the cost-benefit of this project by adding the revenue, productivity gain,better recognition and subtracting the monthly cost. The answer will be $11,289.33

Whereas, the ROI is

Legend:

Revenue = gain from investment

cost of project = cost of investment

Therefore, by subtracting the selling price with the cost, we can get the revenue for this project.

The figure below give us a summary report and also consist of an analysis of the cost-benefit and *ROI ( Return Of Investment) for our project. Our total estimated cost for this project will be $831,600. Our analysis of the monthly cost-benefits will be around $11,289.33 and the ROI will be 1.

*ROI is the performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.

The return on investment formula:

Read more: http://www.investopedia.com/terms/r/returnoninvestment.asp#ixzz1k3EQY1z4

Lastly, I wish everyone Happy Chinese New Year in advance!! :)