Financial Modeling & Business Case Development Playbook (Cost-Benefit, NPV)

Don't guess — a wrong discount rate invalidates every comparison you make later. As an interim proxy, use the company's most recently disclosed WACC from investor materials if public, or a hurdle rate one to two points above the cost of debt for private companies, but flag it explicitly as provisional until Finance confirms it.

Exclude them entirely from the decision math — sunk costs are the same in every scenario, including do-nothing, so including them just adds noise without changing the ranking of options. If stakeholders keep raising them, address it directly in the executive summary rather than in the model.

Only if you can attach a defensible, if conservative, dollar estimate and a confidence rating — otherwise list them separately as strategic rationale alongside the NPV, not inside it. A business case that needs soft benefits to clear its hurdle rate should be labeled as such, not smoothed over.

Match it to the asset's useful life or the strategic planning cycle, whichever is shorter — most operational initiatives use 3-5 years, while infrastructure or capex-heavy projects may justify 7-10. Longer horizons should always carry a wider sensitivity band, since forecast error compounds with time.

At minimum once, 6-12 months after go-live, comparing actuals against the original model line by line. High-value or high-risk initiatives warrant a quarterly check against the Benefits Realization Tracker until the payback period has elapsed.