Free PM calculator · Business case
NPV, ROI, IRR & Payback Calculator
Build the numbers for a business case. Enter the initial investment, the yearly net benefits and your discount rate. You get net present value, ROI, internal rate of return, payback and discounted payback.
| Year | Net cash flow ($) |
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How to read these business case numbers
Net present value converts future benefits into today's dollars using a discount rate, then subtracts the investment. A positive NPV means the project earns more than your cost of capital. It is the measure most finance teams prefer.
ROI = (Total benefits − Investment) ÷ Investment
IRR = the rate r where NPV = 0
IRR is the break-even discount rate. If it is higher than your hurdle rate, the project is attractive. Payback is how long it takes to earn back the investment; discounted payback does the same using discounted cash flows, so it is always longer.
Worked example
A new customer portal costs $500,000 and saves $200,000 a year for four years. At an 8% discount rate, NPV ≈ $162,425, ROI = 60%, IRR ≈ 21.9%, payback = 2.5 years and discounted payback ≈ 2.9 years. These are the default values above.
Comparing projects
When choosing between projects, pick the higher NPV. IRR can mislead when projects differ in size or timing, and payback ignores benefits that arrive after the payback point. Remember that benefits must be realized after delivery, so track them in a benefits register.
Related: NPV, IRR, ROI, payback period, business case.