Define the economic criteria for validating the innovation project
Upstream innovation driven by economic analysis

The main criteria you need to define are :

• NPV, net present value: this is the sum of discounted cash flows over the life of a project: discounted income – discounted expenditure.

• IRR, internal rate of return: this is the discount rate that enables the repayment of invested capital and its remuneration, and is also the rate that cancels out the NPV.

• MOP, or operating margin: this is the accounting balance of a project's revenues and expenses: revenues – expenses.

• PI, profitability index: discounted revenues – discounted expenses.

• Payback: period of time after which revenues cover expenses. It can be calculated with or without discounting.

Your net present value (NPV) calculation will require year-by-year cash flows, from the first R&D expenditure to the last year of sale (or even...