NUMBERS & JUDGMENT / FREE EXCEL TOOL
Does the investment earn its cost?
A Capital Project ROI & Payback workbook for comparing the full upfront commitment with the future cash benefits it is expected to create.
7 workbook tabs · Up to 10 years · Base and downside cases · Discount-rate sensitivity
Free Excel download. No sign-in or email signup required. Open the Start Here tab before editing the inputs.
The decision
Do the expected benefits justify the cash committed—and does the answer survive a weaker outcome? Include the initial purchase, setup costs, working capital, annual benefits, ongoing costs, growth assumptions, project life, discount rate, and terminal proceeds.
Inside the workbook
Inputs feed annual Cash Flows, a calculation Model, a Sensitivity heatmap, and a Dashboard with cumulative cash and discounted-cash charts. The workbook reports base and downside net present value, simple and discounted payback, upfront cash required, and lifetime net cash benefit. Start Here and Methods explain the timing conventions.
The worked example: a positive base case is not the whole risk picture
The fictional five-year project requires $185,000 upfront. Its base net present value is approximately $22,513, with simple payback around 3.6 years. Lower benefits and higher upfront project costs turn the downside net present value to approximately negative $63,774.
Use it in three steps
- Include all incremental cash commitments, including implementation and working capital—not only the purchase price.
- Enter defensible annual benefits, recurring costs, timing, project life, and discount rate. Keep units and inflation assumptions consistent.
- Review the downside case and sensitivity table. Compare value creation, liquidity requirements, and recovery timing separately.
Important boundaries
The initial outlay is at time zero; operating cash flows are discounted at year-end. Working capital is assumed recovered at the end of the project. Approximate fractional-year payback interpolates operating recovery, but terminal proceeds remain at year-end. The model excludes financing, tax effects, depreciation benefits, and an IRR calculation. Positive net present value is sensitive to the assumptions; it is not a guarantee.
Connect the project to a wider forecast scenario →
Free educational model. No email gate. All examples are fictional. Review assumptions and obtain appropriate professional advice for consequential investment decisions.
