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 multiple measures that capture different dimensions of value: profitability, value over time, and total lifetime costs. ROI shows how much return you get relative to the investment, but it can be distorted by scale and accounting methods and doesn’t account for when cash flows occur. NPV puts cash flows into present value terms, reflecting the time value of money and indicating whether the project adds wealth at a given discount rate. TCO sums all costs over the asset’s life—from purchase and installation to operation, maintenance, energy, and end-of-life disposal—so you can compare options with different upfront prices and ongoing expenses. Using them together gives a well-rounded view: ROI shows efficiency, NPV shows value creation in today’s terms, and TCO reveals the true lifetime cost. Relying on a single metric can mislead: ROI may miss timing and scale effects, NPV alone doesn’t convey size or long-run cost, and TCO alone omits the value created by the investment.