Model engineering project value from costs, revenue, taxes, and salvage. Review discounted cash flows carefully. Make sharper capital decisions with clearer long-term investment insight.
This sample shows one engineering investment scenario. Use it to understand the input structure before entering your own project values.
| Input Item | Example Value | Unit |
|---|---|---|
| Equipment Cost | 250,000 | Currency |
| Installation Cost | 35,000 | Currency |
| Working Capital | 20,000 | Currency |
| Project Life | 6 | Years |
| Discount Rate | 11 | % |
| Inflation Rate | 3 | % |
| Tax Rate | 25 | % |
| Salvage Value | 30,000 | Currency |
| Annual Revenue / Savings | 95,000 | Currency |
| Annual Operating Cost | 28,000 | Currency |
| Annual Maintenance | 9,000 | Currency |
| Yearly Adjustments | 0, 2500, 4000, 3500, 3000, 5000 | Currency |
Net Present Value:
NPV = Σ [ CFt / (1 + r)t ] - Initial Outflow
Where:
Operating cash flow after tax:
Operating CF = EBIT - Tax + Depreciation + Adjustment
EBIT:
EBIT = Revenue - Operating Cost - Maintenance - Depreciation
Terminal value in final year:
Terminal Value = After-tax Salvage + Working Capital Recovery
Profitability Index:
PI = Present Value of Inflows / Initial Outflow
Equivalent Annual Value:
EAV = NPV × [ r(1+r)n / ((1+r)n - 1) ]
Net present value measures whether a project creates value after discounting future benefits and costs. It helps compare equipment, process, automation, energy, and capacity investments on a common economic basis.
The discount rate reflects required return, financing cost, and project risk. A higher rate reduces present values more aggressively, which can turn a marginal engineering investment into a negative NPV decision.
Inflation should be included when your projected revenues or costs are stated in future nominal terms. If all estimates are already real values, use a real discount rate and keep inflation assumptions consistent.
Working capital is the cash tied up in inventory, spare parts, or process support needs. It is usually treated as an initial outflow and recovered near the end of project life.
Salvage value is added in the final year as a terminal benefit. This calculator also considers taxable gain above ending book value before adding the after-tax salvage amount.
A positive NPV means the discounted future cash inflows exceed the total initial investment. In simple terms, the project is expected to add economic value at the selected hurdle rate.
Engineering projects often show different escalation patterns across labor, power, materials, and maintenance. Separate growth inputs improve realism and produce a better long-range economic forecast.
Yes. Replace revenue with annual savings if the project reduces energy, labor, scrap, or downtime. The calculator works for most capital budgeting cases with measurable yearly cash impacts.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.