Capital Expenditure (CapEx) ROI Fundamentals
Capital expenditure (CapEx) is money spent on long-term assets — machinery, vehicles, real estate, or major technology infrastructure — that a business expects to generate returns over several years rather than a single accounting period. Because the payoff is spread out, evaluating a CapEx decision requires more than comparing the purchase price to the revenue it generates; it requires accounting for how much cash actually comes back, how long that takes, and what that future cash is worth today.
This calculator works from four inputs — initial cost, annual cash flow, useful life, and cost of capital — and returns three things: the simple lifetime net inflow and ROI, the simple payback period, and the discounted Net Present Value (NPV). It does not model Internal Rate of Return (IRR), depreciation tax shields, or lease-vs-buy comparisons; those related concepts are covered further down.