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Return on investment and payback

General calculation · any country

Before investing in equipment, a refurbishment or a project, check how much it returns and how long it takes to get your money back.

€
years
What it brings in each year
€
Extra income or savings it generates, minus its running costs.
%
The yearly return you require for tying up the money (for example, what it would cost to borrow it). At 0 nothing is discounted.
Total return (ROI)
—
Payback period
—
Discounted payback
—
Net gain
—
Net present value (NPV)
—
See year-by-year detail
YearCash flowCumulativeDiscounted cumulative

How it is calculated

  • ROI = (sum of cash flows − investment) ÷ investment.
  • Payback: the point where the cumulative total stops being negative, assuming cash arrives evenly within each year.
  • With a discount rate, each year is divided by (1 + rate)^year: discounted payback, and NPV = sum of discounted cash flows − investment.

Assumptions

  • Net cash flows at the end of each year.
  • No taxes or inflation unless you include them in the cash flows.
  • Total ROI ignores when the money arrives; NPV does not.