Return on Investment ROI:

There are different ways to calculate it. The simplest calculation is to divide the benefit - or return - of an investment by the cost of the investment. That is, through the following mathematical operation:

ROI = Profit / Investment

If the result is positive, it means that the investments made a profit. On the other hand, if it is negative, it means that losses were obtained, and it would be convenient to review and optimize the actions.

The purpose of the return on investment (ROI) metric is to measure, by period, the rates of return on money invested by an actor to decide whether or not to make an investment. It is also used as an indicator to compare different investments within a portfolio.

Discount rate

The discount rate is the cost of capital that is applied to determine the present value of a future payment. With the net present value (NPV) of an investment it is possible to determine whether a project is profitable or not.

The discount rate is widely used when evaluating investment projects, as it tells us how much the money we will receive at a later date is worth now. [1]

In calculating the profitability of investment projects, the discount rate is usually defined as the one that corresponds to the cost of the financial resources used to carry out said investment.

Sensitivity analysis:

Technique used to facilitate decision-making by selecting the variables that most affect the outcome of a project and those that have little impact on the final result. For its calculation, changes in the environment are considered and an estimate of changes in variables of interest is made.

Under these concepts, WaterProof calculates the economic benefit of the savings (in the costs of operation and maintenance of the infrastructure), which are obtained by the NBS. In addition, using as a basis the portfolio of interventions generated by the system and the implementation, maintenance and opportunity costs defined for the NBS, the year-by-year costs are determined for each of the actions together with the operating costs. Using the discount rate indicated by the user, the costs and benefits are brought to present value.

Using WaterProof, the user can perform a simple sensitivity analysis through the variation of the discount rate under a lower and upper limit. For this, the following equation is used:

TB/(1+TD)^A

Where:

TB -> It is the Total of the benefit.

TD -> Discount rate, brought from financial parameters.

A -> Index for the current year

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