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How Financial Metrics for Projects and Subprojects are Calculated

The following rules are applied for calculating IRR, MIRR, Payback Period and other metrics for investments that include child investments. The financial metrics are calculated based on the aggregated amount of the projects and subprojects.

In the investment hierarchy, the financial metrics show for the investment itself and rolled up next to the parent investment.

• The cash flow starts from the first fiscal time period where the cost plan starts in relation to all the investments and child investments.
• The initial investment is the sum of the initial cost of all investments and child investments.
• If the main investment or any child investment has no costs planned, then zero is used in the metric calculations.
• The reinvestment rate and the total cost of capital defined for the top-level main investment are considered for the MIRR calculation.

More information:

Financial Metrics for Planning