Investment calculation.: A decision-making aid for investment in anaesthesia

In view of the fact that financial resources are limited the calculation of investment is a decision-making tool enabling an assessment of the success potential of an investment. Typically, the current situation is compared with alternative investments. There are limits to such assessments, since they are based on assumptions about the future. Two basic methods of assessment are static and dynamic tools. All methods judge cash flow over time. For example, the internal rate of return (IRR) is defined as the discount rate that gives a net present value (NPV) of zero. The NPV is calculated from an annualised cash flow by discounting all future amounts to the present. As an investment decision tool, the calculated IRR is used to rate alternative investments. Often, more than one of these different methods are applied to ensure an optimal decision.