About the Asset ROI Calculator
What is the Asset ROI Calculator?
Before buying a machine, vehicle or software system, compare what it costs with what it earns or saves. This asset ROI calculator works out the annual return (IRR), total ROI and payback period over the asset's life.
Enter the cost, the yearly benefit (extra revenue or cost savings), the yearly running cost, the useful life and the resale value at the end.
How to use the Asset ROI Calculator
- Asset Cost incl. Installation (₹) (sample: 20,00,000)
- Yearly Extra Revenue or Cost Savings (₹) (sample: 6,50,000)
- Yearly Running Cost – power, maintenance, operator (₹) (sample: 1,50,000)
- Useful Life (years) (sample: 7)
- Resale Value at the End (₹) (sample: 2,00,000)
- Press Calculate Asset ROI (results also refresh as you type). The result card shows the Annual Return (IRR), along with Total ROI over the life, Net yearly benefit, Payback period and Total net gain.
Formula used
0 = −Cost + Σ Net benefit ÷ (1 + IRR)ᵗ + Resale value ÷ (1 + IRR)ⁿ
- Net benefit = yearly benefit − yearly running cost
- Payback = cost ÷ net yearly benefit
Returns are before tax; depreciation on the asset reduces your tax.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Asset Cost incl. Installation (₹) | 20,00,000 |
| Yearly Extra Revenue or Cost Savings (₹) | 6,50,000 |
| Yearly Running Cost – power, maintenance, operator (₹) | 1,50,000 |
| Useful Life (years) | 7 |
| Resale Value at the End (₹) | 2,00,000 |
| Result | Value |
|---|---|
| Annual Return (IRR) | 17.46% |
| Total ROI over the life | 85% |
| Net yearly benefit | ₹5,00,000 |
| Payback period | 4 years |
| Total net gain | ₹17,00,000 |
Tips for using the Asset ROI Calculator
- Accept the purchase if the IRR exceeds your cost of borrowing plus a margin for risk.
- Include training, installation and downtime in the cost.