Enter your assumptions
The example values are illustrative. Use one currency throughout. Calculations run in your browser; inputs are not sent to us.
Cash expenditure at time zero, in one currency.
Annual cash savings or contribution before the costs entered below.
Additional annual cash costs attributable to the investment.
Cash flows are received at each year-end; 1–50 whole years.
Your scenario assumption, consistent with the cash-flow basis.
Results from your assumptions
- Annual net cash benefit
- Simple payback estimate
- Net present value
- Undiscounted net cash gain
An investment can recover its initial cost while still providing an inadequate return once the timing of cash flows is considered. This calculator shows simple payback alongside net present value for constant annual cash benefits and operating costs. It discounts each year’s net benefit at the rate you provide. The example rate and operating period are illustrative inputs; they are not a recommended cost of capital or a forecast.
- Model
- Illustrative scenario; replace the example inputs
- Currency
- Use the same currency for every monetary input
- Data handling
- Local browser calculation; no upload or storage
Formula and cash-flow timing
Annual net cash benefit equals gross cash benefit minus additional operating costs. Simple payback divides the initial investment by that benefit when it is positive. If the benefit is zero or negative, the model reports no positive payback rather than returning an invalid or misleading period. Fractional payback assumes benefits accrue evenly during each year; it is a simple approximation separate from the year-end timing used for NPV. If payback exceeds the operating period, the investment is not recovered within that period.
Net present value equals minus the initial investment plus the sum of annual net cash benefit divided by (1 + r) raised to each year number, where r is your percentage discount rate divided by 100. The model treats investment as occurring now and annual net benefits as received at the end of years one through the selected final year.
Choose a consistent set of assumptions
The cash benefit should be incremental to the decision. Existing receipts that would arise without the investment do not belong in the benefit estimate. For an industrial technology project, include the consequences of installation, energy use, maintenance and any extra saleable production that the rest of the operation can support.
The model holds annual values constant. It does not add inflation or calculate tax. Your selected rate should therefore be consistent with the treatment of prices, tax and risk in the inputs. The example rate is provided to make the calculation usable and has no status as a recommended benchmark.
Read the decision boundary
A positive net present value means that the entered cash flows exceed the initial expenditure at the entered rate and timing. It does not establish that the cash flows are achievable. Change the annual benefit, operating costs and duration to identify which assumptions most affect the sign and size of the result.
The calculation excludes residual value, staged construction expenditure, changes in working capital and uneven cash flows. Those features require a fuller project model. For early screening, the useful outcome is a clear statement of the annual benefit and operating life needed to justify further investigation, supported by technical and customer evidence.
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