I know that "IT projects" are very vague, but can anyone point me where I can find common-used interest rates used to evaluate projects in the IT industry?
thanks, Saving Changes...
Sort By:
Darren KosaPlanning & Controls ContractorHampshire, United Kingdom
Hi João,
Could you give your definition of ‘Interest Rates’?
I’m guessing it’s not the rate paid / charged for using money…
I'm talking about the interest rate that we use with project selection methods, more specifically with the economic models.
We need the interest rate to calculate the discounted cash flows, the internal rate of return, the payback period, etc.
Every company that I have worked at determines the rate differently. Some use a rather high rate, based on what they want to achieve. Others use the prevailing interest rate for loans to their type of company. Others use a custom rate, based upon the cost of money in their own bond portfolio. Others use the current rate of return on their own overall investments.
Talk to your Finance or Treasury department. They should have a average rate of return on cash that they can give you on either an annual or monthly basis. You can use those rates to do a full cash flow analysis.
If your company does not keep a rate like that, you could use a publicly published interest rate for your own country.
Remember that interest rates and currencies are related. if you are not doing business in US dollars, do not use the US Fed Funds or Prime rate. Make sure that your rate matches the currency you are doing business in. Saving Changes...
