ROI Calculator
How to use this tool
This tool is designed to facilitate the process of financialy accessing a new project. Financial parameters such as Net Preset Value (NPV), Internal Rate of Return (IRR), Return on Investment (ROI), and Pay-Back Period as well as Cash Flow charts will be provided to the user by just one click.
Inorder to use this web-tool, following information should be entered:
- Tax Rate: Represents the company's tax bracket. The tax rate should reflect the overal company tax bracket and not only the project below.
- Cost of Capital: Represents the company's return on capital. In other words, if the company decides to invest in an existing project in that company which the yield percentage is known (e.g. buying back its stocks).
- Numbers Unit: Represents the unit that the user will use when entering the data. The unit has no effect on financial analysis and it only facilitates the process of entering information.
- Copy cell values when adding new year: This was also designed in order to facilitate the process. By checking this, the tool will copy the previous year's number in the new cell when the "Add Year" button is clicked.
The next step is entering the data. The data will be the projected costs and benefits of the project in the next years. There are 3 major sections available and the user can select a name for each one that best describes its contents. In each section there is a table with a description and a cell for entering cost/benefit. The user then enters the cost/benefit description and enters the forecasted amount of that cost/benefit in the next years. The user can extend the time horizon by clicking on "Add Year" which will add a new year to all rows. The user can also add unlimited rows in each section by clicking "Add Row". There is also a button to distinguish the depreciation and investment from other costs/benefits of the project. The investments are the costs that will not affect the tax directly, but through the depreciation. On the other hand, depreciations are not real cash flow and only affect the taxable income for each year.
After entering all costs/benefits related to the new project, by clicking on the "Calculate" Button, financial metrics as well as the cash flow charts will be provided. At the end, the "Print Version/Show Version" button will provide a printable version of all the data and financial metrics in a landscape view.
You can also load a sample page by entering "0000" as the case number in the next section.
Load Saved Projects
At the end of the the tool you can save your data and load it for future use. the loading process is only possible trought the case number that will be given to you when you save. You can load your case by entering the case number below and click on "Load Saved Project" button.
General Informations
Tax Rate %
Cost of Capital %
Net Present Value (NPV)
The "Net Present Value" or NPV is defined as the sum of costs and benefits over the years in this project. The future values has been deflated by the "Cost of Capital" rate to represent their value in today's dollars.
A positive NPV represents that the project income rate is higher than the company’s other projects meaning that it makes more money that company's average based on the investment. On the other hand, a negative number shows that other projects in this company yield more income. However this does not mean that the project is not beneficial, it just means that it yields less that other projects in the company.
Internal Rate of Return (IRR)
The "Internal Rate of Return" or IRR is the project's rate of return. It is calculated by the interest rate that makes the NPV equal to zero. The calculation process is based on trial and error with the precision of 0.01%.
A beneficial project's IRR will be higher than market interest rate. Also if the project's IRR surpasses the company's "Cost of Capital" it represents that the project income rate is higher than of the other projects in the company.
Return On Investment (ROI)
The "Return On Investment" or ROI represents the percentage of income gained compared to the made investment. This value does not incorporate the time value of money and is calcuated annualy. The numbers above are the ROI for the final year for both without and with tax calculations. A more detailed ROI broken down to ROI of each year is here:
Pay-Back Period
Pay-Back Period, as its name suggests, represents the time it takes the project to break even. The time value of money is not considered here and the value is calculated based on the costs and benefits of the project.
For a stable economy, high payback periods are acceptable while in an unstable economy in which the economic state is not predictable for future or an economy with high inflation rate, a project with shorter pay-back period is preferable.
Net Present Value (NPV)
The "Net Present Value" or NPV is defined as the sum of costs and benefits over the years in this project. The future values has been deflated by the "Cost of Capital" rate to represent their value in today's dollars.
A positive NPV represents that the project income rate is higher than the company’s other projects meaning that it makes more money that company's average based on the investment. On the other hand, a negative number shows that other projects in this company yield more income. However this does not mean that the project is not beneficial, it just means that it yields less that other projects in the company.
Internal Rate of Return (IRR)
The "Internal Rate of Return" or IRR is the project's rate of return. It is calculated by the interest rate that makes the NPV equal to zero. The calculation process is based on trial and error with the precision of 0.01%.
A beneficial project's IRR will be higher than market interest rate. Also if the project's IRR surpasses the company's "Cost of Capital" it represents that the project income rate is higher than of the other projects in the company.
Return On Investment (ROI)
"Return On Investment" or ROI represents the percentage of income gained compared to the made investment. This value does not incorporate the time value of money and is calcuated annualy. The numbers above are the ROI for the final year for both without and with tax calculations. A more detailed ROI broken down to ROI of each year is here:
Pay-Back Period
Pay-Back Period, as its name suggests, represents the time it takes the project to break even. The time value of money is not considered here and the value is calculated based on the costs and benefits of the project.
For a stable economy, high payback periods are acceptable while in an unstable economy in which the economic state is not predictable for future or an economy with high inflation rate, a project with shorter pay-back period is preferable.