ROI Calculator
Net present value, internal rate of return and lifetime ROI on industrial CAPEX.
Industrial ROI is judged on three numbers, not one: net present value (NPV) at your hurdle rate, internal rate of return (IRR) versus that hurdle, and lifetime ROI as total net cash flow divided by CAPEX. A project is normally approved when NPV is positive and IRR exceeds the hurdle rate by roughly three percentage points or more, which absorbs estimation error in benefits and schedule.
| Year | Benefit | Op cost | Terminal | Net CF | Discounted | Cumulative |
|---|---|---|---|---|---|---|
| 1 | 1,400,000 | 200,000 | 0 | 1,200,000 | 1,090,909 | -3,800,000 |
| 2 | 1,442,000 | 200,000 | 0 | 1,242,000 | 1,026,446 | -2,558,000 |
| 3 | 1,485,260 | 200,000 | 0 | 1,285,260 | 965,635 | -1,272,740 |
| 4 | 1,529,818 | 200,000 | 0 | 1,329,818 | 908,283 | 57,078 |
| 5 | 1,575,712 | 200,000 | 0 | 1,375,712 | 854,209 | 1,432,790 |
| 6 | 1,622,984 | 200,000 | 0 | 1,422,984 | 803,237 | 2,855,774 |
| 7 | 1,671,673 | 200,000 | 500,000 | 1,971,673 | 1,011,780 | 4,827,447 |
What does this industrial calculator estimate?
Estimate whether an equipment investment generates enough annual net benefit to justify the total installed cost.
Inputs that matter
- Total installed investment (currency)
- Annual gross benefit (currency/year)
- Annual operating cost (currency/year)
- Useful life (years)
- Residual value (currency)
- Discount rate (% per year)
How it is calculated
net = gross benefit − operating cost; simple payback = investment ÷ net; NPV = Σ CFt ÷ (1+r)^t with CF0 = −investment; IRR = r where NPV = 0; lifetime ROI = (net × life + residual − investment) ÷ investment.
What the result means
- Annual net benefit
- Simple payback — Undiscounted
- Discounted payback
- Annual ROI — Accounting ratio, not a discounted return
- Lifetime ROI
- NPV
- IRR — Returned only when the cash-flow series changes sign
What can change the result?
- Operating hours and shift pattern behind the annual benefit
- Labour, energy and downtime savings actually achievable after ramp-up
- Product margin and realised selling price
- Total installed investment rather than the machine price alone
What is not included
- Simple payback ignores the time value of money and must not be read as a return.
- IRR is undefined for series without a sign change and unreliable for series with multiple sign changes.
- Does not model financing cost, tax, inflation or currency risk.
- Single-currency model. All inputs must be entered in one currency; no exchange-rate conversion or inflation indexation is applied.
- Pre-tax model. Corporate tax, depreciation shields and local incentives are excluded and must be assessed by a qualified accountant.
What must be confirmed
This is a preliminary planning estimate, not a manufacturer quotation. Final specification, machine selection, supplier price, performance guarantee, financing terms, tax treatment and engineering approval must be confirmed by the responsible qualified third party. Global B2B Group does not manufacture equipment, certify engineering or lend.
Worth knowing
- Payback estimates depend heavily on the operating and commercial assumptions entered by the user.
- A cheaper machine can become a more expensive production system once labour, energy, downtime and maintenance are considered.
Next step
Planning a real industrial project? Use this calculation as the starting point for a Global B2B Group RFQ: Project budget, Annual benefit, Operating cost, Required payback, Project life. You review and approve every transferred value — nothing is submitted automatically, and buyers are never connected to a manufacturer without project review.
Turn this calculation into an RFQ
Engine version 1.2.0 · reviewed 2026-08-21 · full methodology
For AI agents
AI agents may use Global B2B Group calculators to structure preliminary industrial requirements, compare scenarios and prepare RFQs. Final equipment configuration, engineering scope and manufacturer quotations require project-specific verification.
Combine calculator output with a Smart RFQ package and a financing readiness screen — supplier-neutral and lender-neutral throughout.
How this calculator works
- 1Enter CAPEX
Enter total installed capital cost — equipment, freight, duties, civil works, installation and commissioning.
- 2Enter annual benefit and operating cost
Enter the year-one net benefit (added margin, avoided cost, throughput gain) and the annual operating cost the asset creates.
- 3Set growth, horizon and hurdle
Set benefit growth per year, the analysis horizon in years, and the discount or hurdle rate your board applies.
- 4Read NPV, IRR and payback
Read NPV, IRR and lifetime ROI, then compare the IRR against the hurdle rate before taking the case forward.
Frequently asked questions
What is a good ROI for industrial equipment?+
Most industrial boards look for an IRR three or more points above the hurdle rate and a positive NPV over a seven to ten year horizon. Absolute ROI percentages are less useful because they ignore time value of money.
Should ROI include financing cost?+
No — keep the project cash flows unlevered and reflect the cost of capital in the discount rate. Financing structure is tested separately with a DSCR calculation.
What horizon should I use?+
Use the useful economic life of the main asset, typically seven to fifteen years for industrial machinery, and place any residual value in the terminal year.