Asset Management

Capital Project ROI & Payback (NPV/IRR)

Level annual cash flows arrive at year end.

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1 Inputs

Minimum: 0.01

Minimum: 0

Minimum: 1 · Maximum: 50

Minimum: 0 · Maximum: 100

2 Results

Net Present Value (NPV)
$18,234
Simple payback
2.78 yr
ROI over life
80%
IRR
23.4%
Profitability index
1.36
NPV = Σ CF/(1+r)ᵗ − I; IRR: NPV = 0
Level annual cash flows arrive at year end. NPV includes the chosen discount rate; simple payback does not. IRR can be negative. Test pessimistic savings and include taxes or variable cash flows in a fuller appraisal.

Worked example

Example values are illustrative. Replace them with your measured data.

InputValue
Initial investment50000 $
Annual net savings / cash flow18000 $/yr
Project life5 years
Discount rate10 %

Net Present Value (NPV): $18,234

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About this calculator

How it works

From the investment, the annual net cash flow, the life in years and the discount rate, the tool computes five figures. Simple payback = investment ÷ annual cash flow. ROI over life = (annual × years − investment) ÷ investment. NPV = present value of the annual flows (annuity formula) − investment. IRR is the rate at which NPV = 0, found by bisection. Profitability index = (NPV + investment) ÷ investment.

Worked example (illustrative inputs)

$50,000 invested, $18,000 a year for 5 years, 10% discount rate. Payback = 2.78 years. ROI = 80%. NPV ≈ $18,234. IRR ≈ 23.4%. PI ≈ 1.36.

How to read the result

A positive NPV means the project beats your hurdle rate and creates value. Accept when IRR is at or above the hurdle rate. Use the profitability index to rank projects competing for the same capital. Simple payback ignores the time value of money and anything after payback, so treat it as a quick screen only.

When to use it

Use it for projects with a roughly level annual saving, such as a reliability upgrade or an equipment purchase justified by savings.

À propos de ce calculateur

Traduction (brouillon) — à relire.

Fonctionnement

À partir de l'investissement, du flux net annuel, de la durée en années et du taux d'actualisation, l'outil calcule cinq indicateurs. Délai de récupération simple = investissement ÷ flux annuel. ROI sur la durée = (flux × années − investissement) ÷ investissement. VAN = valeur actuelle des flux (formule d'annuité) − investissement. Le TRI est le taux qui annule la VAN, trouvé par dichotomie. Indice de profitabilité = (VAN + investissement) ÷ investissement.

Exemple chiffré (valeurs d'illustration)

50 000 $ investis, 18 000 $ par an pendant 5 ans, taux de 10 %. Récupération = 2,78 ans. ROI = 80 %. VAN ≈ 18 234 $. TRI ≈ 23,4 %. IP ≈ 1,36.

Lire le résultat

Une VAN positive signifie que le projet dépasse votre taux minimal et crée de la valeur. Acceptez si le TRI est supérieur ou égal à ce taux. L'indice de profitabilité sert à classer des projets en concurrence pour le même capital. Le délai simple ignore la valeur temps de l'argent et tout ce qui suit la récupération, donc ne l'utilisez que comme premier filtre.

Quand l'utiliser

À utiliser pour des projets à économie annuelle à peu près constante, comme une amélioration de fiabilité ou un achat d'équipement justifié par des économies.

حول هذه الحاسبة

ترجمة (مسودة) — للمراجعة.

طريقة الحساب

انطلاقاً من الاستثمار والتدفق النقدي الصافي السنوي والعمر بالسنوات ومعدل الخصم، تحسب الأداة خمسة مؤشرات. فترة الاسترداد البسيطة = الاستثمار ÷ التدفق السنوي. العائد على الاستثمار خلال العمر = (التدفق × السنوات − الاستثمار) ÷ الاستثمار. صافي القيمة الحالية NPV = القيمة الحالية للتدفقات (صيغة الدفعات) − الاستثمار. معدل العائد الداخلي IRR هو المعدل الذي يجعل NPV = 0، ويُحسب بالتنصيف. مؤشر الربحية = (NPV + الاستثمار) ÷ الاستثمار.

مثال محسوب (قيم توضيحية)

استثمار 50,000 دولار، 18,000 دولار سنوياً لمدة 5 سنوات، معدل خصم 10%. الاسترداد = 2.78 سنة. العائد = 80%. NPV ≈ 18,234 دولاراً. IRR ≈ 23.4%. مؤشر الربحية ≈ 1.36.

قراءة النتيجة

NPV موجب يعني أن المشروع يتجاوز معدل العائد المطلوب ويخلق قيمة. اقبل المشروع إذا كان IRR مساوياً لهذا المعدل أو أعلى. استخدم مؤشر الربحية لترتيب المشاريع المتنافسة على رأس المال نفسه. فترة الاسترداد البسيطة تتجاهل القيمة الزمنية للنقود وما بعد الاسترداد، فاستخدمها كفرز أولي فقط.

متى تستخدمه

استخدمها لمشاريع ذات وفر سنوي ثابت تقريباً، مثل تحسين الموثوقية أو شراء معدات تبرره الوفورات.

In one line

Level annual cash flows arrive at year end. NPV includes the chosen discount rate; simple payback does not. IRR can be negative. Test pessimistic savings and include taxes or variable cash flows in a fuller appraisal.

Worked example

EXAMPLE

Illustrative values (the calculator defaults), not data from a real site.

Inputs
Initial investment50000 $
Annual net savings / cash flow18000 $/yr
Project life5 years
Discount rate10 %
Results
Net Present Value (NPV)$18,234
Simple payback2.78 yr
ROI over life80%
IRR23.4%
Profitability index1.36

Frequently asked questions

Which metric should I actually use to decide — NPV, IRR or payback?

NPV is the most theoretically sound because it captures the full value created in today's dollars and correctly weighs the timing of cash flows. IRR is intuitive as a percentage return and useful for comparing against your hurdle rate, but can behave oddly for unusual cash-flow patterns. Payback is a fast risk screen, popular with finance teams because it's simple, but it ignores everything that happens after the payback point and the time value of money entirely.

What discount rate should I use?

Use your organisation's hurdle rate or weighted average cost of capital (WACC) if you know it — commonly somewhere in the 8-15% range for industrial capital projects. If you're unsure, ask your finance team; a higher rate makes it harder for long-payback projects to show a positive NPV.

Why does the tool assume the same annual cash flow every year?

It models a level annuity for simplicity, which fits many maintenance and efficiency projects reasonably well. If your project's savings ramp up, decline, or vary significantly year to year, treat this as an approximation and consider a full year-by-year cash flow model instead.

What does a negative NPV actually mean?

It means the project's future cash flows, discounted back to today at your chosen rate, are worth less than what you'd spend to start it — in other words, the money would be better invested elsewhere at that same rate of return. It doesn't necessarily mean the project has no value, just that it doesn't clear your financial hurdle at the assumptions entered.

How is IRR actually calculated here?

The tool searches numerically for the discount rate at which NPV equals exactly zero, using a bisection search, rather than solving a closed-form equation — this is standard practice since IRR generally has no simple algebraic solution for multi-year cash flows.

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