When evaluating facilities investments, which metrics should be used together?

When evaluating facilities investments, which metrics should be used together?

• A. ROI and payback period.
• B. NPV alone.
• C. ROI, NPV, and TCO.
• D. TCO only.

Answer: (C)

Evaluating facilities investments benefits from using a mix of metrics that capture profitability, timing, and lifecycle costs. ROI shows how much profit you get relative to the investment, but it doesn’t account for when cash flows occur or differences in project size and duration. NPV puts expected cash flows into present value terms, so you can see whether the project adds value after considering the time value of money. TCO looks at everything you’ll spend over the asset’s life—purchase, installation, operating costs, maintenance, energy, downtime, and end-of-life disposal—so you understand the total long-term cost. Using all three together gives a fuller view: ROI offers a quick profitability sense, NPV shows value created in today’s dollars, and TCO reveals the total ownership burden over the asset’s life. Relying on any single metric can mislead in different ways, so combining ROI, NPV, and TCO provides the most informed basis for decisions.

Evaluating facilities investments benefits from using a mix of metrics that capture profitability, timing, and lifecycle costs. ROI shows how much profit you get relative to the investment, but it doesn’t account for when cash flows occur or differences in project size and duration. NPV puts expected cash flows into present value terms, so you can see whether the project adds value after considering the time value of money. TCO looks at everything you’ll spend over the asset’s life—purchase, installation, operating costs, maintenance, energy, downtime, and end-of-life disposal—so you understand the total long-term cost.

Using all three together gives a fuller view: ROI offers a quick profitability sense, NPV shows value created in today’s dollars, and TCO reveals the total ownership burden over the asset’s life. Relying on any single metric can mislead in different ways, so combining ROI, NPV, and TCO provides the most informed basis for decisions.