Project Payback, NPV & IRR Calculator
Screen an industrial CAPEX case on identical assumptions — undiscounted payback for intuition, NPV for value creation, IRR for return efficiency.
Illustrative planning only. Default inputs are example assumptions, not market rates, fees, coverage or tenors from any lender or country source. Results are not credit approval, pre-approval, a financing offer, underwriting, a recommendation or a commitment. Excludes fees, taxes, insurance premiums, FX and lender-specific terms. The formula and assumptions are explained below the tool.
Interpretation
Payback is a simple recovery test — it ignores time value and post-payback cash flow. Use it as a first filter, never as the sole gate.
NPV at the company's cost of capital measures absolute value creation. Positive NPV is the primary economic screen. IRR shows the return earned on the invested capital; compare against your hurdle rate.
For lender-side coverage sizing, pair this with the Debt Capacity Calculator and the DSCR Calculator.
What does the payback, NPV and IRR calculator tell you?
It converts one CAPEX amount and one year-1 free cash flow, grown at a constant annual rate, into three screening numbers: undiscounted payback (years until cumulative cash flow turns positive), net present value at your discount rate (USD), and internal rate of return (% per year). Use NPV as the primary value test and payback and IRR as secondary checks.
Who is it for, and when should you use it?
Who: Industrial buyers, plant managers and finance teams screening an equipment or production-line investment before building a full business case or RFQ.
When: Early in project definition, once you have an order-of-magnitude CAPEX figure and a defensible estimate of the annual cash the project adds, and again when supplier quotations change the CAPEX.
Worked example (illustrative values)
Illustrative inputs (the tool's defaults, not market data): initial CAPEX USD 15,000,000; year-1 free cash flow USD 3,200,000; growth 3% per year; 10-year horizon; 10% discount rate.
| Undiscounted payback | 4.45 years |
|---|---|
| NPV at 10% | USD 7,027,980 |
| IRR | 19.5% per year |
Hypothetical figures for explanation only; they are not a benchmark or a forecast for any real project.
What are the assumptions and limitations?
- Cash flows are year-end, after-tax free cash flows that you enter; the tool does not model tax, depreciation or financing separately.
- Growth is constant for every year; real projects should be sensitivity-tested with lower volumes, delays and cost overruns.
- No terminal or residual value is added after the horizon.
- The verdict thresholds (for example a 5-year payback) are screening conventions, not lender or company approval rules.
Frequently asked questions
How is payback calculated?
Payback is the point at which the running total of cash flows, starting with the negative CAPEX in year 0, first reaches zero. Fractional years are interpolated within the year it turns positive. It ignores the time value of money.
Which matters more, NPV or IRR?
NPV, when you know your cost of capital: it measures the value created in USD. IRR is the discount rate at which NPV equals zero and is useful for comparing against a hurdle rate, but it can be misleading for unusual cash-flow patterns.
What discount rate should I use?
Use the rate your finance team applies to comparable investments, usually the company's weighted average cost of capital or a set hurdle rate. The calculator does not suggest a rate.
Is the result an investment approval?
No. It is an educational screening tool. Real investment cases need verified supplier quotations, operating data, sensitivity analysis and internal or lender review.
What should you do next?
Global B2B Group does not rank lenders. All figures shown are indicative and subject to lender approval and project-specific due diligence.
