CapEx Calculator: NPV, Payback, ROI and IRR
Evaluate capital expenditures with Net Present Value (NPV), payback period, ROI, IRR, depreciation schedules, and total cost of ownership.
Select Capital Project Preset:
Capital Budgeting Parameters
Tax Shield Included: Depreciation legally shields taxable income from taxes, bolstering net annual operating cash flow.
Net Present Value
$18462
Value-Accretive (Go)
Payback Period
3.2yrs
Break-even timeline
Internal Rate (IRR)
17.0%
vs 10% hurdle rate
Nominal ROI
56.3%
Total project return
Cumulative Cash Flow Trajectory & Payback CrossingTCO: $1,25,000
Annual Operating Cash Flow vs Discounted ValueWACC: 10%
Annual Multi-Year Cash Flow & Depreciation Schedule
Initial Investment: -$1,00,000| Year | Revenue | Maintenance | Depreciation | Taxes Paid | Net Cash Flow | Cumulative Cash | Discounted PV |
|---|---|---|---|---|---|---|---|
| Year 1 | $40,000 | -$5,000 | $20,000 | -$3,750 | $31,250 | $-68,750 | $28,409 |
| Year 2 | $40,000 | -$5,000 | $20,000 | -$3,750 | $31,250 | $-37,500 | $25,826 |
| Year 3 | $40,000 | -$5,000 | $20,000 | -$3,750 | $31,250 | $-6,250 | $23,479 |
| Year 4 | $40,000 | -$5,000 | $20,000 | -$3,750 | $31,250 | $25,000 | $21,344 |
| Year 5 | $40,000 | -$5,000 | $20,000 | -$3,750 | $31,250 | $56,250 | $19,404 |
Step-by-Step Worked Corporate CapEx Example
Consider a manufacturing company evaluating a new CNC industrial machine costing $100,000 with a 5-year useful life, straight-line depreciation, producing $40,000 annual revenue, requiring $5,000 annual maintenance, an effective corporate tax rate of 25%, and a discount hurdle rate of 10%:
1. Operating Cash Flow:
Straight-Line Depreciation = $100,000 / 5 = $20,000/yr
Taxable Profit = $40,000 - $5,000 - $20,000 = $15,000/yr
Corporate Tax = $15,000 × 25% = $3,750/yr
Net Cash Flow = $40,000 - $5,000 - $3,750 = $31,250/yr
2. Payback, NPV & True IRR:
Payback = 3 + ($6,250 / $31,250) = 3.20 Years
NPV = ($31,250 × 3.7908) - $100,000 = +$18,462
Nominal ROI = ($156,250 - $100,000) / $100,000 = 56.25%
Exact Internal Rate of Return (IRR) = 16.99% (vs 10% Hurdle)
Decision Rule: Because NPV is strongly positive (+$18,462), payback occurs in 3.2 years (well within the 5-year asset life), and the 16.99% IRR comfortably exceeds the 10% cost of capital, this capital expenditure creates substantial enterprise value and should be approved.
Frequently Asked Questions (CapEx & Capital Budgeting)
Corporate Finance References & Guidelines
Corporate Finance Institute (CFI) - Capital Expenditure (CapEx) Guide
Comprehensive guide to budgeting, accounting treatment, and DCF modeling of capital asset purchases.
Investopedia - Net Present Value (NPV) and Internal Rate of Return (IRR)
Detailed financial primer explaining discounted cash flow fundamentals and hurdle rate decision frameworks.
Harvard Business Review - A Refresher on Internal Rate of Return (IRR)
Executive managerial analysis on interpreting IRR, reinvestment assumptions, and capital allocation trade-offs.
IRS Publication 946 - How To Depreciate Property (MACRS & Straight Line)
Official United States Internal Revenue Service guidance on asset class recovery periods and depreciation methods.
Financial & Tax Disclaimer: This calculator is provided solely for educational and preliminary budgeting analysis. Actual capital investment evaluation requires comprehensive due diligence, jurisdiction-specific tax counsel (including local MACRS/bonus depreciation rules), and enterprise risk assessment.
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Budget and ExpenseQuick Tips
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