Knowing how to talk money in any business is the ultimate key for explaining business proposals and getting investors interested in a product or service. Especially in the renewable industry, knowing the finances, values, and return on investments of projects is extremely important. Key mechanisms and calculations to explain to a potential investor for a renewable energy project are:
• What is the rate of return of return of the project
• Present, annual, and future worth of the project
• Before tax and after tax cash flow of the project
• and Net Present Value of the project
These calculations will show if the project is even feasible or would generate any cash flow after taxes. With these, finance-based processes like providing the opportunity cost of capital and payback period analysis are also important in explaining the project’s potential for success. Stermole and Stermole describe payback period as, “the time required for positive project cash flow to recover negative project cash flow from the acquisition and/or development years” (Stermole, page 488). A payback period analysis would be a great way to show investors that the project is sound and would be able to recover any initial costs that the investor puts forward.
Works Cited
Stermole, F. J., & Stermole, J. M. (2012). After Tax Investment Decision Methods and Applications. Economic evaluation & investment decision methods (13th ed., p. 488). Lakewood, Colo.: Investment Evaluations Corp..
Hi Bret,
You made a good point about being able to talk the talk about money in investing! That’s all people really want to know about, how much is this costing and what are the future yields! A payback analysis would be a great procedure to include in the proposition to show not only the investor but the employees as well. By showing the life cycle cost and energy saved by the renewable resource on a public projector, it would greatly help sponsor education and a sustainable moral at the workplace. This type of business prospect would further encourage the business to move in a sustainable direction. Can you think of any other methods that we could take the economic and finance sector and incorporate it into the business morals or policies? Thank you for your well-thought-out post, I would love to hear your input!
Katie Loyd
Hi Bret,
You made a good point about being able to talk the talk about money in investing! That’s all people really want to know about, how much is this costing and what are the future yields! A payback analysis would be a great procedure to include in the proposition to show not only the investor but the employees as well. By showing the life cycle cost and energy saved by the renewable resource on a public projector, it would greatly help sponsor education and a sustainable moral at the workplace. This type of business prospect would further encourage the business to move in a sustainable direction. Can you think of any other methods that we could take the economic and finance sector and incorporate it into the business morals or policies? Thank you for your well-thought-out post, I would love to hear your input!
Katie Loyd
Katie Loyd