How to calculate return on investment: formula, investment project evaluation, profit calculation. Return on investment (ROI) - calculation methods

reservoirs 12.10.2019

reservoirs

ROI is an index that shows the relationship between the costs and the planned profit of the project.

This indicator is calculated:

PI = NPV/IC

P.I. ( Profitability Index) – profitability index investment project;NPV( Net present value) – net discounted income;
IC ( Investment Capital) is the initial investment capital spent.

If the profitability index is 1, this is the lowest acceptable rate. Any value below 1 indicates that the net profit of the project is less than the initial investment. As the value of the index increases, so does the financial attractiveness of the proposed project.

The profitability index is a valuation method applied to potential capital expenditures. This method divides the projected capital inflow by the projected capital outflow to determine the profitability of the project. The main feature of using the profitability index is that the method ignores the scale of the project. Therefore, projects with large inflows Money may show lower index values in calculations, since their profit is not so high.

NPV - Net Value of Investment or Net Real (Present) Value of Investment

NPV = PV - Io

PV- the current value of the cash flow;
io- initial investment.

The above NPV formula simply shows cash income.

Calculating the planned net worth of investing in a business is not easy. This is due to the fact that money depreciates over time (inflation occurs). Therefore, $1 earned now cannot be equated to $1 received a year from now. In order to compare the received profit with the predicted one, you will need to use indexation factor.

When investing, it is believed that the faster that same $1 is earned, the more valuable it will be the profit received in the future.

I is the amount of investment in the t-th year;
r is the discount rate;
n is the investment period in years from t=1 to n.

Investment value: initial investment and additional capital costs

The discounted projected cash outflows represent the initial capital costs of the project.

The initial investment is only cash flow required to run the project.
All other costs may occur at any time during the life of the project and are included in the calculation using the enterprise's discounted net income. These additional capital costs may affect tax or depreciation benefits.

Decision Making - ROI Index

The return on investment index (PI from the English Profitability Index) should not have a value less than one. If so, then it is necessary to create conditions for its increase.

PI > 1. If the ratio is greater than one, it indicates that the expected cash inflows in the future exceed the forecasted discounted cash outflows.
PI< 1. A value less than one indicates that the expenditure of funds will be greater than the projected profit. In this case, you should not run this project.
PI = 1. A value of one indicates that any gains or losses from the project are minimal. Therefore, the project will not attract the attention of investors.

When using the profitability index, projects are considered, the value of which will be more than one.

The name does not mean profit!

As a rule, the most stable and profitable investments come from companies that produce everyday products. And high-tech innovative organizations often can only bring loss.

Wealth is the right investment!

Most owners of large companies and networks invest their savings in investments. Thus, they protect themselves from possible adverse situations.

Investment is the investment of a certain amount of money in a project in order to realize it and convert it into a permanent profit. The main goal of investment activity is the constant receipt of income from invested funds, which must exceed the initial capital at times. Each investor is aware that the return on investment is the key to the successful conduct of business, as well as an excellent indicator of the effectiveness of the invested project. If the investor, having a limited amount of capital, has several proposals for investing in projects, he will stop at the best option, which stands out due to such an indicator as the index of return on investment.

The first step is to understand how to calculate economic benefits in absolute and relative terms. To do this, you should have a good understanding of the question of which project, when minimum investment and costs will bring big profit.
Let's study the analytical index of return on investment, learn how to apply the formula for calculating the return on investment, and also theoretically analyze the necessary formulas for assessing profitability.

ROI Formula

The profitability of an investment project is defined as an indicator by which the investor understands how effective his investment is. It can be used not only in investment activities, but also in assessing the level of income of an enterprise or for comparing the profitability of different products from entrepreneurial activity. The return on investment index is considered to be universal, which means it is used to compare the productivity of different scales of production or projects. Mathematically speaking, return on invested capital is defined as the ratio of net income to initial capital.

The efficiency of the calculation is achieved using a formula that acts as a method of return on investment.

Did you understand the coefficients? The profitability calculated in this way will be justified. To do this, the investor needs to know the initial cost of all products, the income of the enterprise, as well as investments in marketing. When getting a value > zero, the investment progressivity index will be optimal.

It is necessary to calculate the return on invested capital, because:

the distribution of cash flows over time is taken into account;
the amount received during the entire investment project is specified;
it analyzes which of the proposed projects may be more profitable for the investor.

Methods for calculating the return on investment are reduced to calculating the profitability of the project and to assessing the increase in capital. To highlight the golden mean of profit, a return on investment ratio is required, which can be achieved through the ratio of net profit to volume share capital organizations.

It is important to understand that in order to determine the profitability of an investment project, it is not enough to know the quality of investments. The ROI indicator only indicates the effectiveness of the investment, reflecting the return on the money spent. In order to calculate the ratio of capital and income received, it is necessary to familiarize yourself with such a concept as the index of return on investment (pi).

Calculation of investment return index formula

Profitability Index (pi) is a coefficient obtained by calculating the relative return on investment. Calculation formula:

Analyzing the ratio of the net value of investments in monetary terms and the total amount of investments invested in the project, we obtain an indicator of the profitability of the investment.

The value of pi cannot be displayed without the Net Present Value coefficient. This standard can be reversed through a specific expression:

Let's try to understand the concepts of all these values:

n - the period of time, calculated in years, for which the investment project exists;
r - the rate that must be used when recalculating the planned income into a single volume with the already existing value;
cf - funds received each year for the maintenance, development and maintenance of the investment project.

How to correctly evaluate the return on invested capital?

The level of return on investment is conventionally denoted as pi. Whether an investment project is expedient or not will be decided only after the profitability index indicator is in the desired range:

profitability index > 1 (the best indicator for an investment project, as it will bring more profit);
indicator \u003d 1 (it is worth thinking about its profitability, some indicators of the progressivity of invested funds may turn out to be insignificant);
profitability index< 1 (инвестиция не оправдывает ожиданий инвестора, так как проект не дальновиден).

Despite the simplicity of the indicators and the computability of the formula, the definition of the discount rate becomes incomprehensible. Why? This rate is influenced by many factors that are almost impossible to predict. The foreign policy, economic situation in the country can give rise to a change in the discount rate. Uncertainty may increase if the life of the project is long.

How to correctly estimate the discount rate?

First of all, it should be noted that the discount is an indicator that displays the amount of cash in the flow relative to future income. In order to correctly estimate these returns, the investor needs to keep in mind forecasts of revenue, expenses, as well as the structure of capital and investments. From the point of view of economics, the discount rate is an indicator to which it is necessary to strive for when investing capital. These figures can help in making many key decisions, as well as deciding between projects.

The ROI formula requires a discount factor. To calculate it, it is important to understand the minimum income threshold, the dynamics of inflation, as well as the rate that indicates the risks of what the investor invests in. Before you learn how to calculate the index of profitability of investments, you should take into account the role of the rate. So, the discount rate will help you understand the exact profitability of the project, as well as comparing the performance of the project with a minimum income when investing in a similar business.

There are several ways to estimate the discount rate. In the case of lending, the lower threshold of the discount rate will be the interest on the loan, since otherwise the investor will not be so interested in direct participation in the project. When financing the project with own funds, the discount rate will be equivalent to the indicator of the initial capital.

Thus, the calculation of the return on investment is made according to several indicators. Wherein:

net present value must stop at a mark greater than 0;
return on investment shows a coefficient greater than 1;
the internal rate of return on investment is calculated according to the equation depending on the specific situation (how the investor received funds for the project).

The return on capital investments is recalculated in several cases: at the time of selection desired project or when comparative analysis several projects, as well as directly at the time of the project and after its completion.

It is quite difficult to evaluate such a process as return on investment, although there are indicators that require the least analytical costs. Now let's look at the concept of "payback period" (PBP). Theoretically, the payback period refers to the period of time required to ensure the receipt of funds to make up for investment costs. The unit of measurement for this indicator is a year. The rate of this time is also very important at the stage of evaluating such a process as return on invested capital.

Mainly, the predicted payback period will come in handy for the investor in conditions of instability. economic system in the country or when choosing a business with advanced technology. If you believe the practice, in Russia, under the current domestic economy the payback period of projects is close to 3 years. In more developed countries this figure can vary from 7 years.

Calculation of the discount return on investment index (iddi formula)

The discounted investment yield index is calculated so that the investor can analytically represent all investments during the implementation of investment production, and not just the costs spent at a time for the first time. The discounted index formula is:

The numerator of the formula contains the familiar NPV indicator, and the denominator contains the data ic, i.e. the capital of the funds that was originally spent.

Having calculated the discount rate, it is possible to directly evaluate the effectiveness of the project that the investor chooses for his own capital investments. The estimate is made according to the familiar algorithm for extracting the coefficient pi. The DPI indicator is optimal if it turns out to be more than 1. In this case, the forecasts about the invested project will be justified, it can be considered for further investment. If DPI is equal to 1, the conclusion is simple: the costs that were spent will be at the same level as the profit that the investor will receive from the project.

In other words, the investment project will cost zero, which does not correspond to main goal investment. Production is unequivocally removed from consideration if the discount indicator is less than 1, such a project will incur losses. There are cases when DPI(1) is greater than the DPI(2) norm. This means that the investor needs to choose the project option with the first coefficient, since it is more attractive from the point of view of investment activity.

Social investment indices

The concept of "social investment" as a clear definition of investment activity does not exist. Rather, it is an established concept that has a specific purpose - to attract a positive effect in the eyes of the public. Investments in the development of low-income and underdeveloped regions, as well as investments in the corporation's own employees (training courses) can be examples of such projects. Thus, social investors (this is what the contributors of their own investments in social projects are called) direct funds to the development of solving the problems of society as a whole or separately of some organizations.

The effectiveness of such projects, as a rule, cannot be accurately determined. It is necessary to determine social investment through the calculation of the results from the social effect. How can you calculate which social investment project will be the most favorable?

First of all, screening for a negative or negative indicator of a particular object of investment activity is important. Such a check excludes unnecessary projects.

Secondly, screening for a positive or positive indicator is equally important. The strategy for the development of an investment project should include such social sectors that could give maximum efficiency and progressiveness. It is important to combine these checks in order to correctly assess the return on investment.

In the case of assessing the profitability of social investments, it is important to take into account several factors, resulting in a two-factor model. in a simple way profitability forecasting will be considered a social bond business plan, since the progressiveness is determined initially. The numerical indicator is set, it remains to be implemented so that the contributions show the expected result.

The investor needs to invest money, set strictly achievable goals, analyze their achievement. Such an assessment can be made in the case of the pay-for-performance model. By investing in social projects, customers and investors are unlikely to receive a return equivalent to market investments. Most likely, social investment activity should pursue somewhat different goals, for example, raising one's status in the eyes of the public, popularity or charity.

Positive and negative aspects of the profitability index

opportunity to analyze comparative characteristic different projects that could qualify for development through investment;
there is a very high probability of predicting risks and avoiding them with less loss for the business.

In contrast, there are several disadvantages of calculating the efficiency of investment production:

calculation of forecasts for future cash flows;
the cost of resources and time to assess the discount rate for different projects;
the expenditure of resources and time to assess the impact of factors on future cash flows, which ultimately seem completely unpredictable.

ROI (return on investment) is the rate of return on investment. It allows you to calculate the effectiveness of the company's investments. In the article we will tell you in more detail what ROI is, how to calculate it, we will give formulas and examples of calculation.

In this article you will learn:

What is ROI

ROI is a measure of return on investment that is used to evaluate the return on investment. It reflects the profitability of the project as a percentage - if the value is more than 100%, or unprofitability - if the value is less than 100%.

The issue of evaluating alternative proposals is of particular importance in conditions of limited financial resources. Before investing money, investors determine the feasibility and expected effectiveness of their investments, for which they calculate the return on investment (ROI).

ROI calculation formula

There are several formulas for calculating ROI. The most commonly used is the following:

ROI = (Revenue - Cost) / Investment Amount * 100%

To calculate the ROI ratio, the following data is required:

prime cost - costs for the purchase of raw materials and materials, delivery, production, marketing and advertising costs, etc.;
income - the final profit from the sale of a product or service;
investment amount - the amount of money invested.

Normative value of the return on investment

The ratio of profit to the amount of investment shows how many times the first is greater than the second. If the resulting value is less than 100, then the investment will not pay off (see also).

ROI Calculation Example

Consider on conditional example comparison of return on investment in the development of three types of products:

	Investment in development	Quantity	Cost price
Product 1
Product 2
Product 3

Calculations:

Product 1 = ((1350 - 1012) * 9) / 2804 = 108.5%

Product 2 = ((1450 - 1015) * 11) / 4600 = 104%

Product 3 = ((980 - 755) * 8) / 1,581 = 113.9%

The calculation results show that Product 2 has the most high value in terms of marginal profitability and in absolute terms, it brings more profit, but the return on investment in it is the smallest. But Product 3 with the lowest marginal profit showed the best results in terms of investment efficiency. Managers can adjust the product promotion policy: increase the volumes for Product 3, optimize the cost in order to increase marginal profitability. At the same time, it is important to strike a balance so that activity and an increase in investments in Product 3 do not lead to a decrease in ROI. To do this, it is important to calculate it on an ongoing basis and monitor the dynamics, taking timely management decisions. .

Evaluation of profitability for the period

If we add a period to the previous formula, then it will allow us to estimate the profitability for the period of holding the asset and how much the amount of invested funds increased by the end of the period:

ROI = (Total investment at the end of the period + Profit for the period - Amount of investment in the period) / Amount of investment in the period * 100%

ROI = (Profit + (Sale Price - Purchase Price)) / Purchase Price * 100%

where profit is the income that is received for the entire time the asset (capital) is held;
The purchase price is the price at which an asset (capital) was purchased;
The selling price is the price at which the asset (capital) will be sold at the end of the holding period.

ROI formula for calculating the effectiveness of advertising

In the advertising industry, ROI is used to evaluate individual advertising campaigns. In this case, a simplified calculation is used, which does not take into account the costs of procurement, logistics, wages, and so on. The estimate includes only the cost of the advertising campaign. Given this, it is more correct to call the indicator ROMI (return on marketing investment), because it evaluates the effectiveness of marketing investments. The calculation formula looks like this:

marginal profitability or markup (see also calculation and analysis of marginal profit on an example );
advertising campaign budget
advertising campaign revenue.

If the value of the indicator is more than 100%, then this means that investments in advertising have fully paid off and made a profit. If the value is 100%, you have earned twice as much as you invested in the advertising campaign. A negative value suggests the opposite - investments in advertising were not effective.

ROMI Calculation Example

Let's calculate the ROMI value using the example, if we know marginal profitability (%):

marginal profitability of 25%,
advertising costs 190 thousand rubles,
income 970 thousand rubles.

Result: Gross profit \u003d 970 * 0.25 \u003d 242.5 thousand rubles.

ROMI = (242.5 - 190) / 190 * 100% = 27.6%

The ROMI indicator has errors, because does not take into account all the expenses of the business during the advertising campaign. But in this case the dynamics of changes is important - this is an objective indicator. Such an analysis is recommended to be carried out at least once a month. By tracking the return on investment, it becomes possible to distribute them more competently in order to increase the return on investment.

What is the difference between ROI and ROMI

The difference between the two indicators ROI and ROMI is that ROI is the most general concept and shows the effectiveness of any investment. ROI is actually a financial indicator, but marketers have adopted this ratio and began to use it when evaluating individual marketing campaigns, as a result of which a more particular case has appeared - the ROMI indicator - return on marketing investment.

ROI Analysis

ROI is a relative indicator; when comparing several investment objects, it helps to identify the object that will bring the greatest return on investment. At the same time, in absolute terms, the profit indicators of other projects may be higher.

After ranking the projects, it becomes obvious which ones require further development and promotions, and which should be suspended.

Speaking about the structure of ROI, there are four categories of potential profit that a company can receive as a result of a project:

reduction of labor intensity (labor costs);
reduction in capital costs (reduction in the cost of materials, stationery, printing costs, energy costs, etc.);
increase in labor productivity (usually achieved from the implementation of solutions that lead to a decrease in forced downtime of the system or an increase in the efficiency of performing certain tasks);
business profit (as a rule, this is an increase in the real profit of the company, which can be achieved by increasing the level of sales, increasing profit per customer, etc.).

The question often arises - why use four different categories to calculate the return. The answer is simple: each category serves to show an important aspect of income/expenditure ratios. Together, they allow a fairly accurate assessment of the success of the project as a whole.

Advantages and disadvantages of ROI

A serious disadvantage of the ROI is that it does not take into account the timing of the profit. Every time money is invested in a project, it is "canned" until it starts to make a profit. Money raised in one project cannot be invested in another. Therefore, investors should take into account the benefits of earlier cash flow from investments in order to have resources for other investments.

There are also other disadvantages:

The calculation is based on accounting profit, which may depend on various methods accounting.
ROI is a relative measure and therefore does not take into account the amount of investment.
The duration of the project is not taken into account
The time value of money is ignored.

However, this ratio also has advantages:

The calculations are simple and can be done fairly quickly.
The well-known concept of measuring profitability as a percentage is used.
Accounting profit can be easily calculated from financial statements.
Covers the entire duration of the project.
Managers and investors are used to thinking in terms of profit and therefore this method is more understandable for them.

findings

For a full assessment of the effectiveness of investment investments from the point of view of the owner, investor, bank or government bodies, it is necessary to consider various components of the project. When generating only one set of performance indicators, there may be a danger of inadequate representation of the project from the point of view of other stakeholders.

The main goal of any investment is its effective placement for profit. And one of the important indicators that reflects how effective the investment is is the profitability ratio.

Thus, the return on investment is financial indicator, which allows the investor to determine whether the investment is profitable or unprofitable. You can also use the following interpretation of the concept: it shows what expenses in the form of investments must be incurred in order to achieve the desired level of profitability / profit.

Accepted abbreviation: return on investment ratio - ROI. The formula below in the photo reflects in more detail and clearly:

Where:

PE - net profit;
I is the amount of investment

In financial practice, the concept of return on investment capital is also used. Actually this concept is analogous to ROI and can simply be said to be a different name. The indicator under consideration is calculated when determining the effectiveness and profitability of any investment project (see).

Its calculation allows solving problems such as:

approve or reject the project, based on the calculated data of the level of efficiency;
allows you to compare two or more projects and choose the most cost-effective;
how much an investor can get profit per unit of invested capital.

Taking into account the above described, the profitability of an investment project is an indicator that reflects the ratio of income / profit to total amount initial investment of the investor in percentage terms.

In financial practice, the analysis of the profitability of investment capital and projects can be divided into two main groups.

There are groups based on the following:

methods with calculations based on discounting;
methods based on accounting valuation of investments.

discount methods

The first group includes the following methods:

Let's consider each method in more detail.

What does the profitability index show? The answer is simple: it reflects whether the income from the project covers the costs incurred by the investor on it. If, as a result of the calculation, the indicator is greater than or equal to 1, the project is appropriate for approval, otherwise it is rejected. Calculated using the formula below.

Where: NPV - net present value (discounted amount of cash flows for the analyzed period); And invested.

Advice! When choosing a project from a number of alternative ones, it is necessary to use the PI calculation. It is the most convenient for determining the effectiveness of the project at the initial stage.

The internal rate of return on investment is the rate at which discounted net income is equal to zero.

Visually, the formula looks like this:

Where, r is the cost of capital of the investment project

What does this indicator represent? Answer: reflects the maximum allowable level of costs / expenses for the project, at which the expediency of investing capital remains.

Thus:

the project is accepted at a value higher than or equal to the capital;
the project is rejected if the indicator is less than the cost of capital.

Both of the methods described are based on an estimate taking into account temporal changes.

Simple Analysis Methods

The second specified group includes the following method for calculating the return on investment - the calculation of the accounting rate of return (ARR). What does it show? Answer: what is the average annual profit that can be received as a result of the project implementation.

This method of return on investment is used mainly in the analysis of short-term investments. What is it connected with? Firstly: it does not take into account the temporary change, and secondly: income is treated as net profit. The method is considered easy to calculate. Statistical methods of return on investment are also characterized by ease of calculation without the use of discounting.

That is why the calculation of the ARR indicator is used in the analysis using statistical methods and can be represented in a simplified formula:

Where:

SP - average profit per year;
SI - average amount investment.

Advice! It is advisable to use the calculation of the ARR indicator only when analyzing short-term projects using balance sheet data.

For a more efficient investment of capital and a more accurate determination of the possible profit that will be received in the future, it is necessary to use not only statistical methods, but in without fail apply discounting. What will it give? Answer: more precise definition what will be the most profitable investment for the capital owner.

Indicator standards

Along with calculated indicators, there is the concept of their standard values. In fact, they are the base on the basis of which a conclusion is made based on the results of the calculation. Namely: whether the calculated coefficients and indices correspond to the standards.

For example, here are the main indicators of the effectiveness (profitability) of investments in the context of industries and types: foreign investment and profitability of the industry - not less than 0.16; Agriculture– not less than 0.12; trade - 0.25; construction - at least 0.22 are considered the norm.

If we consider the standards for statistical methods that do not take into account the temporary nature of cash flows, do not apply discounting and use accounting data for analysis, then:

the normative indicator of profitability for trade enterprises is allowed from 0 to 0.07;
standard for industrial enterprises from 0 to 0.16.

The profitability ratio for any industry, without exception, is unsatisfactory if its value is less than 0.

Most investors, before investing in an investment project, determine the feasibility of their investments, determine the expected effectiveness of the project, the expected return on investment. If an investor has several investment projects to choose from, with limited investment funds, he chooses the best one using a comparative indicator of return on investment.

A profitable project means profitable, profitable. The profitability indicator reflects the level of profitability of a project. It is widely used in the practice of assessing profitability. economic activity enterprises, evaluation of the production of a specific product or a separate production, compared by profitability various types products, enterprises and investment projects. The profitability indicator is universal and applicable for comparing the efficiency of production or investment projects of different scale. In numerical terms, this indicator looks like the ratio of net profit to the amount of capital with which this profit was obtained. Therefore, it is sometimes called the return on invested capital.

ROI calculation

In assessing the relative return on investment, the Profitability Index is used, which is denoted by PI and is calculated as:

PI = NPV / I

NPV () - net present value of investments in rubles;
I - the amount of investment in the project in rubles;
PI (Profitability Index) - return on investment ratio.

Net present value is defined as:

CF (Cash Flow) - cash flow initiated by investments in each of the n years of the investment project;
r is the discount rate;
n is the lifetime of the investment project in years.

Return on investment shows the return on investment in an investment project in relative terms.

Sometimes investments in a project, especially in a large project, are spread over time, then in the calculation the investments are taken into account with discounting at the average annual rate of return and I is defined as:

I - the amount of investment in the t-th year;
r is the discount rate;
n is the investment investment period in years, from t =1 to n.

The formula for calculating the return on investment takes the form:

DPI - discounted profitability of the investment project.

PI index of return on investment, shows the feasibility of an investment project:

PI > 1 - which means that the investment project is profitable and can be taken into consideration;
PI \u003d 1 - the project must be analyzed according to other indicators for evaluating the effectiveness of investment investments in order to understand whether to accept it for consideration or reject it;
PI< 1 - проект убыточен и снимается с рассмотрения.

The complexity of such an assessment, with its external simplicity, lies in the uncertainty of the real discount rate throughout the life of the investment project. The discount rate is influenced by many factors, and they are poorly predictable. For example, the introduction of sanctions against Russia changed the discount rate, but this event was hardly predictable. If the life of the investment project is significant, then the uncertainty factor increases, and the PI estimate of the investment project may be erroneous.

There are many ways to estimate the discount rate. When investing in a project with credit funds, the lower limit of the discount rate will be the interest rate on the loan, and this is understandable why. If the discount rate is higher than the rate of the credit resource, the investor will simply put money on a deposit in the bank and will not "suffer" with the investment project.

If an investment project is financed by an investor from own funds, then the rate of return on investment must be greater than or equal to the rate of return on the investor's capital. Accordingly, the discount rate of the investment project must be less than the tax rate on the income of operating capital.

The same problem arises when estimating future revenues from a project. It is difficult to predict the amount of income from the implementation of the project over the years of its existence, especially if the investor invests in different years existence of the project.

Therefore, project evaluation is always carried out according to a set of indicators: PI, NPV and IRR. In this case, NPV must be greater than 0, PI greater than 1, and IRR - the internal rate of return is calculated from the equation. IRR is the discount rate at which the investment in the project is equal to the income received from it for the entire investment period. In the case of investments from credit resources, IRR must exceed the bank's lending rate, and in general, the internal rate of return must exceed the weighted average price of all investment resources of the project.

The ROI formula is calculated both at the project selection stage, especially when comparing several investment projects, and during the project implementation, and at its completion. It is important for any investor to know whether the expectations from investments were justified and to what extent they were justified.

Among all the estimated indicators of investment investments, the return on investment is the simplest and most obvious. The reciprocal value of this indicator, which is called PP (Pay-Back Period) - investments, is especially clear and is measured in years. This indicator can also be calculated taking into account the discounting of income received and investments made. The indicator shows for what period of time the investment in the project is returned to the investor. The specifics of the Russian economy is such that investment projects with a payback period of up to 3 years "go through". And if we are talking about credit resources, then banks consider a payback period of 5 years to be the maximum allowable. Most investment projects in developed countries have payback periods of 7 years or more.