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Calculated Financials (NPV, IRR, etc) - and tax rate

  • 1.  Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted May 28, 2015 04:18 PM

    Is there anyone that has been able to successfully take into account the tax rate into the calculated financial values?

     

    Clarity allows you to specify reinvestment rate, cost of capital, etc, but, there isn't any place to include any tax rate considerations.



  • 2.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted May 28, 2015 04:52 PM

    Also, has anyone successfully been able to create some custom attributes or custom calculations to calculate NPV annually instead of monthly (which is what is done out of the box)?



  • 3.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted May 29, 2015 08:38 AM

    HI pjromano,

    yes, we plan the same to get rid of the excel template and let Clarity calculate KPIs considering not only tax but also effect of depreciation of the CAPEX transsaction classes as the Business case calcullation has to consider 48 months after project finish.

    We should have it for testing by end of July.

    Currently PMs have to export Cost plan and Benefit plan to the excel and calculated values for NPV, ROR and DPP are then manually written back to Clarity attributes which we use for reporting instead of the OOTB attributes.



  • 4.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted May 29, 2015 09:20 AM

    Miros, that is so cool. Can you please share some more info on the type of set-up you are doing in Clarity PPM to achieve this? This sounds great and I would love to borrow some ideas and insight in this area. This is like an untapped area in many PPM installations.

     

    There is a lot of focus towards IT project financials in companies nowadays and people are asking the same questions. Finance is getting more involved.



  • 5.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted Jun 01, 2015 03:47 AM

    hi whole_milk,

    so basically we are going to set up custom table to capture WACC and hurdle rates per business division and business type and then using the derivation logic based on the company (there is attribute called Division) we determine the values for each project. Same logic applies for derivation of the tax rate.

    Calculation will be done exactly the same way as it is in Excel but the values will be filled in Clarity. For each of the 4 transaction classes there are linked to CAPEX costs we will enable to set the  starting period for depreciation should the assets start depreciating prior end of the project. We will have for this new custom sub-object on investment object (now the KPI's are planned to be calculated for projects only, but later it could be also for Other Work and Ideas)

    These ideas can be borrowed but please also share your thoughts if you think my design is too complex and will go off-track.

    thanks alot!

    Miro



  • 6.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted Apr 11, 2016 10:05 AM

    so here is an update to the KPIs implementation that went live today:

    Business Case object is now subobject of the project and keeps track of KPIs = NPV, IRR and Discounted payback period (not Clarity out of box formulas but our own.)

    This is how the list of the KPIs gets populated: FORECAST version is updated on recalculate action and reads data from the Cost plan (POR) and the Benefit plan linked to POR. Each time there is budget plan approved duriing Workflow (or change request) there is new version (scenario) generated as read only entry.

    There is also possibility to create copies of Forecast version for the different cost plans

    In FORECAST version we maintain the tax rate, WACC and Hurdle rate specific for division.

    I guess the screenshots are more descriptive:

    screenshot.1865.jpgscreenshot.1866.jpg



  • 7.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted Dec 21, 2015 11:51 AM

    Just thought I'd circle back to this one, in case anyone has some thoughts they'd like to share?  (Original post was 7 months ago)



  • 8.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate



  • 9.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted May 03, 2016 08:28 AM

    hi Peter,

    did you see my update on the KPIs calculated with tax effect? see my response to whole_Milk

    regards,

    Miro



  • 10.  Re: Calculated Financials (NPV, IRR, etc) - and tax rate

    Posted May 03, 2016 08:34 AM

    I did - thank you.  I am most interested in how you calculated NPV and IRR, since they were your own calculations.  We've since found a way to do it ourselves, but learning how others have implemented their own formulas can only help us improve!