Business ideas probably occur to you more often than you realize. When looking around your workplace, you see countless opportunities for improvements — to efficiency, sales, morale, etc. These opportunities for improvement are business ideas.

Some business ideas are big, some are small, but all of them have financial impact. Let’s introduce a term: we’ll call the implementation of any business idea a project. How do you measure the financial impact of a project to determine which business ideas are worth implementing?

In this chapter, we’ll introduce some of the concepts behind the financial metrics that managers use to value projects, including the central concept of the time value of money.