Financial calculations on demand

[Geeky]

Can anybody please explain how financials are calculated on a demand?

How to allocate certain amount to the demand

How ROI% is calculated?

How net present value is calculated etc? Please explain these calculations with example.

[Khanna Ji]

My calculation is still not matching. I am adding all the details and excel sheet with all values. Can you try it with this example? 

Cost Plan 1 : License Cost

Cost Plan 2 : Resource Cost

Benefit Plan 

Calculation values on the system

[Geeky]

My calculation is not matching. Attached sheet with all values, can you please try with these values to get the exact value?

Cost Plans 1: License Cost

Cost Plan 2: Resource Plan

Benefit Plan :

System calculated values;

[Khanna Ji]

Following the threat, my calculation is also not matching. It's very hard to understand NVP and IRR. I tried with same example.

[Sandeep V1 · Accepted solution]

Hi Srini,

I took even distribution for cost plans in my earlier calculations, that is why it is slightly off from the system NPV. But now that I see your data, the calculation is matching perfectly. Here is how it is done.

FY19 License cost planned cost = 4285. FY20 License cost planned cost = 5714

FY19 Resource cost plan planned cost = 5760. FY20 Resource cost plan planned cost = 6240

Total FY19 Planned cost = 10045

Total FY20 Planned cost = 11954. After applying discount rate, FY20 planned cost = 11954/1.1 =  10867

Total Planned cost = 10045 + 10867 = 20912

FY19 Benefit cost = 8823

FY20 Benefit cost = 21176. After applying discount rate, FY20 benefit cost = 21176/1.1 = 19250

Total Benefit cost = 19251 + 8823 = 28073

NPV = 28073 - 20912 = 7161

Let me know if this helps.

[Geeky]

Thanks Sandeep that explains everything. I will create a new thread to understand the IRR for same example 🙂

Edit;

Created a new thread to understand the IRR calculation. Please pitch in that thread also to complete the calculation part.

https://community.servicenow.com/community?id=community_question&sys_id=fc882ce5db947f84d58ea345ca961950

Thank you so much for helping me to understand this calculations. You are champ.

sanjivsachdev - You too buddy, thanks for helping me out... you guys are doing great job.