Project ROI Calculator

NPV discounts every future year's net benefit back to today's dollars before comparing it to the investment, so a project with the same total benefit spread over more years shows a lower NPV than one that delivers it sooner. Simple ROI just adds up total net benefit over the whole Benefit Duration and compares it to Total Investment with no regard for timing, so it can rate two projects as equally attractive even when one pays back years faster and is worth substantially more once discounted.

The discount rate should reflect your organization's cost of capital or hurdle rate — the minimum return you'd need to justify tying up money in this project instead of an alternative use, including a bank rate, an investor's required return, or the return available elsewhere in the business. A higher rate is appropriate for riskier or less certain benefit estimates, since it makes the calculator discount those future benefits more aggressively before they count toward NPV.

IRR here is found by testing candidate rates between -50% and 500% and narrowing the range fifty times until NPV crosses zero, which converges to a precise answer for the vast majority of realistic projects but cannot represent a true break-even rate that falls outside that -50% to 500% span. If your Annual Benefit is extremely large relative to Total Investment, treat an IRR reported near either edge of that range as a sign the true rate is out of bounds rather than a literal answer.

Yes — Annual Ongoing Costs are subtracted from Annual Benefit to form the Net Annual Benefit before any discounting happens, so every dollar of added ongoing cost reduces the cash flow being discounted in every single year of the Benefit Duration, not just the total. That compounds: a small increase in a recurring annual cost has more effect on NPV over a 10-year project than the same increase would on a 2-year one, because it's subtracted that many more times.

999 is a sentinel value, not a literal number of years — it appears whenever Annual Ongoing Costs are equal to or greater than Annual Benefit, meaning the project never generates a positive net annual cash flow to pay back the investment at all. Rather than showing 0 years (which would misread as instant payback) or an undefined result from dividing by zero or a negative number, the calculator reports 999 to flag that payback is unreachable under the entered assumptions.