NPV, IRR and Project Viability Evaluation

Net Present Value (NPV) and Internal Rate of Rerturn (IRR) are quite similar financial expressions.

In fact the two share the same formula (same variables being measured), but use it to describe the present value of something from 2 different perspectives - (1) what is this project's expected future cashflow currently worth is today's dollars? vs. (2) how profitable (%-wise) will the return on project investment be based on (1)?

NPV = Net present value is today’s value of the expected future cash flows.

If NPV is positive, the project is estimated to be profitable

IRR = The expected rate of return from the proejct.

If the IRR of a project is higher than the WACC, the project is estimated to be profitable

The below simple spreadsheet area explains both concepts nicely. This project would generate a $3.7k profit (NPV) over 5yrs and have a significantly profitable 15.64% IRR, higher than the 8% WACC of the 20k invested.

 The project's estimated cash inflows over 5 years would add value, on paper at least

References:

https://www.investopedia.com/ask/answers/032615/what-formula-calculating-net-present-value-npv.asp 

https://www.youtube.com/watch?v=Fw5-wccViOM

https://www.youtube.com/watch?v=cSAfp6D28RM

Social Authentication in ASP.NET Core MVC

A common modern convenience for apps is the ability to choose to authenticate and create an account based on credentials from an existing service that most people have (ie. Google, Twitter, LinkedIn, GitHub, etc.). in this post I will walk through the configuration of social authentication for Google and LinkedIn accounts.

Setting up social authentication in ASP.NET Core is a lot easier than you might think...

Before implementing this feature you will need to register for a Google and a LinkedIn developer account which will then give you access to the 2 values that make the magic of this built-in authentication possible: clientKey and clientSecret.

Important(!): you will also want to register the Callback/Redirect URLs for each social authentication as shown below. This redirect URL below is for my project running on localhost:44396 obviously ("/signin-google" is the path you want to append to your app root for Google and "/signin-linkedin" for LinkedIn):

Once you have this setup, you will be able to wire them up in the Startup.cs ConfigureServices() method of an ASP.NET Core 3 MVC Web Application ie:

  public void ConfigureServices(IServiceCollection services)  
     {  
       services.AddDbContext<ApplicationDbContext>(options =>  
         options.UseSqlServer(  
           Configuration.GetConnectionString("DefaultConnection")));  
       services.AddDefaultIdentity<IdentityUser>(options => options.SignIn.RequireConfirmedAccount = true)  
         .AddEntityFrameworkStores<ApplicationDbContext>();  
       services.AddControllersWithViews();  
       services.AddRazorPages();  
       services.AddAuthentication()  
       .AddGoogle(o =>  
       {  
         o.ClientId = "[YourGoogleClientId]";  
         o.ClientSecret = "[YourGoogleClientSecret]";  
       })  
       .AddLinkedIn(o =>  
       {  
         o.ClientId = "[YourLinkedInClientId]";  
         o.ClientSecret = "[YourLinkedInClientSecret]";  
       });  
       // Add application services.   
       services.AddMvc();  
     }  

Now you just have to:

• Create your ASP.NET Core 3 MVC Web Application project with Identity options as below

• Install a couple Nuget packages for Google OAuth2 and Linked OAuth respectively

• Call "Update-Database" from Nuget Package Manager Console

• Modify Startup.cs

To implement this feature for your users you only need follow a couple steps when setting up the project (whether ASP.NET MVC or the newer ASP.NET Core MVC) to enable some builtin identify and authentication handling after which you can configure and customize to fit your app's particular custom authentication needs. Follow the images below for proper installation of the required 2 Nuget packages, the db command, etc.

First, make sure you create your ASP.NET Core MVC project with "Individual User Accounts" radio button selection and "Store user accounts in app" dropdown selection as follows:

Change Authentication to use Individual User Accounts- this sets up the required boilerplate template code

You will add this Nuget package for LinkedIn authentication

You will add this Nuget package for Google authentication

Next you will need to create the database objects (ASPNET app auth db and tables) via "Update-Database" Package Manager Console command

Finally, modify Startup.cs ConfigureServices() method as shown in the snippet above. Compile and give it a whirl.

And that is all there is to it. Strangely there is not a lot of documentation on exactly how to do this and what can cause it to not work; I spent over an hour debugging what turned out to be a not-so-obvious issue (in my case I was following instructions that erroneously suggested I inject unneeded services to the services.AddAuthentication() instantiation in the snippet of Startup.cs above).

If your keys and Callback URLs are correct you will be able to authenticate to Google and LinkedIn

Once you have registered your social account, you can then log in with it and you will see the following (notice "Hello!...." and "Logout")

If you are like me and do not want to keep to adding yet more and more credentials to LastPass, your users probably don't either. Implementing Social Authentication is a powerful tool that you can leverage with relative ease in ASP.NET Core 3 MVC Web apps.

If you have questions on implementing this or just need some help and general guidance, feel free to comment or drop me an email at colin@sonrai.io


GitHub: https://github.com/cfitzg/DotNetSocialAuth


References:

http://codereform.com/blog/post/asp-net-core-2-1-authentication-with-social-logins/

https://docs.microsoft.com/en-us/aspnet/mvc/overview/security/create-an-aspnet-mvc-5-app-with-facebook-and-google-oauth2-and-openid-sign-on

https://ankitsharmablogs.com/authentication-using-linkedin-asp-net-core-2-0/  

https://stackoverflow.com/questions/53654020/how-to-implement-google-login-in-net-core-without-an-entityframework-provider

Compound Interest

Ultimately the two most important factors in growing money is the size (%) of growth (rate of return or ROR) and the rate of growth (or the number of times the investment earns interest on a certain balance total, that interest is added to the balance, and then the investor begins earning interest on this new, higher amount).

This is why investing in something that will return 5% in 1 year is much worse than an investment that will return 5% quarterly or 4 times a year as illustrated below:

Year 1: $1,000 (5%) == $1,050

-vs- 

Quarter 1: $1,000 (5%) == $1,050.00

Quarter 2: $1,050 (5%) == 1,103

Quarter 3: 1,103 (5%) == $1,158

Quarter 4: $1,158 (5%) == $1,216

Would you rather receive $1,050 or $1,216 dollars after one year of making a $1,000 dollar loan? 🤔

The power of compound interest is even better illustrated in a chart of growth over a period of several years. The below chart illustrates earning 10% per year on a $1,000 investment for 10 consecutive years.

An example with more money and more growth shows more clearly the power of compound interest

The below graphic shows clearly how important it is to save early. In it, Amy is able to earn enough in 10 years of savings, to earn more over the course of 34 years by simply earning interest off the savings of her initial 10 years of investing. No more contributions- just by earning interest she will have earned more than someone else who skipped those first 10 years and began investing later in their career.

In fact, Ethan contributes $100/month for 24 years and is not able to earn as much as Amy did contributing $100/month for just 10 years because Amy began putting her money to work much earlier than Ethan.

So 10 years go by, Amy consistently saving, Ethan consistently not saving anything. Now(?) Ethan, deciding he needs to begin saving for retirement is starting out with a much lower investment ($1,239.72) than Amy is already at by year 10 ($17,485.70).

The true power of compound interest is in the utilization of time and the time value of money. Because money that is invested wisely (presumably) always has a positive return, if you forgo savings (as I and many of my generation have) earlier on in your career you are incurring a huge opportunity cost; that opportunity being 10 years of 10% growth on $100/month investment with compounding interest.

Ethan chose to decline that opportunity and paid for it by losing out on all of that investment + compounded interest he could have received in the first 10 years of his career ($17,485.70), like Amy did.

Simply put, if you plan to invest (in safe, sound investments), the earlier you start the better off you will be. You cannot buy back time and time is a key ingredient to the growth of money.

Amy (wisely) began investing much earlier than Ethan and because of it, she is able to invest far less and still earn more.