CAPEX ROI Calculator

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CAPEX ROI measures the return a capital investment earns against the amount spent on it, after allowing for the project’s life and your cost of capital. More info →

Input

Enter CAPEX and project assumptions to calculate ROI.

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How This Calculator Works

This calculator checks whether a capital investment, such as a new machine or plant, is worth it. It works out the yearly cash the investment brings in, how quickly it pays back, and its NPV and IRR over the project life at your cost of capital. All figures are before tax.

The Formulas

Annual Net Cash Inflow = Revenue × EBITDA Margin − Maintenance CAPEX
ROI = Inflow ÷ Initial CAPEX · Payback = Initial CAPEX ÷ Inflow
NPV = Inflow × [1 − (1 + r)⁻ⁿ] ÷ r − Initial CAPEX

r = discount rate (WACC) · n = project life · IRR = the rate that makes NPV zero · Profitability Index = PV of inflows ÷ CAPEX · Total ROI = (Inflow × n − CAPEX) ÷ CAPEX

What Each Input Does

Initial CAPEX: The upfront cost of the investment.
Annual Incremental Revenue / EBITDA Margin (%): Extra sales the investment brings each year, and the share kept as operating profit.
Annual Maintenance CAPEX: Yearly spending needed to keep the asset running. It is subtracted from the inflow.
Project Life (Years): How many years the investment produces cash.
Discount Rate / WACC (%): Your cost of capital, used for NPV, the profitability index and discounted payback.

Step by Step

Incremental EBITDA = revenue × margin; maintenance CAPEX is subtracted for the annual inflow.
Annual ROI and simple payback are worked out.
The inflow over the project life is discounted at your rate to get its present value and NPV.
IRR, the profitability index and discounted payback are worked out.

Reading the Result

NPV above 0 – accept; the project earns more than your cost of capital.

NPV at or below 0 – reject; discounted payback shows "not recovered".

Quick Example

CAPEX 1,000,000, extra revenue 800,000 at a 30% EBITDA margin, maintenance 40,000, life 8 years, WACC 10%. The annual inflow is 200,000, so ROI is 20% and payback is 5.00 years. The PV of inflows is 1,066,985, giving NPV of 66,985, IRR 11.81%, PI 1.07 and discounted payback 7.27 years: accept.