The Capital Budgeting tool is a capital budgeting and project appraisal tool that answers the most fundamental question in corporate finance: does this investment create or destroy value? It builds a full Discounted Cash Flow (DCF) model from your inputs, applies straight-line depreciation and corporate tax automatically, and computes four standard decision metrics in one click.
The four metrics — Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index (PI) — are the core toolkit of every capital allocation decision: from a ₹10 lakh plant upgrade to a billion-dollar acquisition. The tool also plots an interactive NPV Profile chart that shows how NPV changes across every possible discount rate, making the IRR visible at a glance.
The tool models uniform intermediate cash flows — a single annual amount repeated across all operating years. Projects with year-by-year varying cash flows require editing the CF After Tax row directly in the table (fully supported — those cells are editable). The tool does not model working capital changes, MACRS depreciation, or multiple tax jurisdictions. For those, use the table's editable cells as a manual override layer.
A complete capital budgeting analysis in under a minute.
Use the three sliders in the Parameters panel to set your discount rate (WACC: 1–40%), project duration (Years: 1–15), and corporate tax rate (Tax Rate: 0–60%). The current value of each is shown in gold above its slider.
Click + Add Cash Flow to add each item. Set the amount, choose its type (Initial, Intermediate, or Final), and optionally add a description. At minimum you need one negative Initial cash flow (your investment) and at least one Intermediate cash flow (your operating return).
The tool builds the full DCF table — inflows, outflows, depreciation, tax, CF after tax, and discounted CF — across all periods. The results appear instantly: four metric cards on the left and the NPV Profile chart on the right.
Green NPV = value created. Green IRR = exceeds hurdle rate. Short payback = capital recovered quickly. PI > 1 = acceptable. Export a PDF or save the model for future sessions (Trial / Premium).
Three sliders drive the entire financial model. Changing any slider after running Calculate requires pressing Calculate again to rebuild the table, but dragging a slider also updates the metric cards and chart live if a table is already displayed.
Each line item you add is one cash flow entry. The tool separates cash flows into three types based on when they occur in the project timeline.
After clicking Calculate, the table fills with columns for each period (Initial, Yr 1 … Yr N, Final) and rows that build the DCF model step by step. The table scrolls horizontally on small screens.
Toggle between Summary and Detail using the two buttons in the Parameters panel. Summary (default) aggregates all your inputs into five computed rows. Detail shows each individual cash flow on its own row, then the same computed rows below. Use Summary for a clean overview; use Detail for auditing exactly which items drive each period's numbers.
The sum of all positive cash flows in each period. In the default example: Revenue + Salvage Value in the final period. Positive amounts are displayed in green.
The sum of all negative cash flows in each period. In the default example: the Capex at time zero, Operating Costs in each operating year. Negative amounts are displayed in red.
Straight-line depreciation computed automatically. The depreciable base equals the absolute value of all negative Initial cash flows. This amount is divided equally across all operating years.
Annual Depreciation = |Total Initial Outflows| ÷ Years
Depreciation appears only in operating years (Yr 1 to Yr N). It is a non-cash expense: it reduces taxable income but does not represent actual cash leaving the business.
Corporate tax charged on EBIT (Earnings Before Interest and Tax) in each operating year. EBIT = Inflows + Outflows − Depreciation. Tax is displayed in parentheses as a deduction. Shown as "—" in the Initial and Final periods and in any operating year where EBIT ≤ 0.
Tax = max(0, EBIT × Tax Rate)
The key operating cash flow figure used for all DCF calculations. For operating years this is the standard after-tax free cash flow formula:
CF After Tax = EBIT × (1 − Tax Rate) + Depreciation
For the Initial and Final periods it equals Gross Inflows + Gross Outflows (no tax adjustment). These cells are directly editable — click any CF After Tax value to override it. Metrics and the chart update instantly. This is how you model year-by-year varying cash flows or apply manual adjustments.
Each CF After Tax value discounted back to present value using the WACC. The sum of the entire DCF row is the project's NPV.
DCF_t = CF After Tax_t ÷ (1 + WACC)^t
The discount factor grows with time: cash flows in later years are worth less in today's money. The Initial column (t = 0) is undiscounted — its DCF equals its CF After Tax.
After calculating, four metric cards appear to the left of the NPV Profile chart. Together they answer every standard capital budgeting question.
The sum of all discounted cash flows. Positive NPV (green) means the project creates value above the cost of capital — accept it. Negative NPV (red) means it destroys value — reject or restructure. The sub-label reads "Value created", "Destroys value", or "Break even" accordingly.
The discount rate at which NPV = 0 — the project's own implied return. If IRR > WACC (green): the project earns more than its cost of capital — accept. If IRR < WACC (red): the project cannot cover its financing costs — reject. Shown as "N/A" when no unique IRR solution exists (e.g., non-conventional cash flows).
The number of years until cumulative after-tax cash flows recover the initial investment. Calculated with fractional precision: e.g., "3.42 yrs" means full recovery partway through Year 4. Displayed as "∞" if the project never recovers its cost. The sub-label reads "Recovery period" or "Not recovered".
The ratio of the present value of future cash flows to the initial investment cost. PI > 1 (green) = acceptable; each rupee/dollar invested returns more than one rupee/dollar in present value. PI < 1 (red) = not viable. Particularly useful for ranking mutually exclusive projects when capital is constrained.
PI = (NPV + |Initial Investment|) ÷ |Initial Investment|
The chart plots NPV on the y-axis against the discount rate (0%–50%) on the x-axis. It answers the question: at what cost of capital does this project stop being viable?
Shows how NPV changes as the discount rate rises. Most conventional projects slope downward from left to right — higher discount rates reduce present values, pulling NPV down. The area above the zero line is shaded green (NPV positive); below is shaded red (NPV negative).
Marks the exact position of your current WACC setting on the curve. The label shows "WACC X%" and "NPV Y" at the dot's position. As you drag the WACC slider, recalculate to see this dot shift along the curve.
The horizontal bold line at NPV = 0. The point where the gold NPV curve crosses this line is the IRR. At any discount rate to the left of that crossing (lower rates), NPV is positive. To the right (higher rates), NPV is negative. The further the crossing is to the right, the more headroom the project has above its hurdle rate.
The total value created by a project in today's money. It sums all future after-tax cash flows discounted back at the cost of capital. A positive NPV means the project earns more than the required return — it adds value to the firm. NPV is the theoretically correct decision criterion: always accept positive-NPV projects.
NPV = Σ CF_t / (1 + WACC)^t
The discount rate that makes NPV = 0. Intuitively, it is the project's own return — the rate it earns on the capital invested. Compare IRR to WACC: if IRR > WACC, the project earns more than it costs to finance. The tool solves for IRR using binary search (bisection method) to within 10⁻¹⁰ precision.
The time required to recover the initial investment from after-tax operating cash flows. It does not account for the time value of money (unlike NPV) and ignores cash flows after payback. Despite its limitations, payback remains widely used as a liquidity and risk measure — projects that recover capital quickly are less exposed to uncertainty over long time horizons.
The benefit-to-cost ratio: present value of future cash flows divided by the upfront investment. A PI of 1.25 means every ₹1 invested returns ₹1.25 in present value. PI is especially useful for ranking projects when capital is limited — it normalises NPV by the investment required, making projects of different scales comparable.
The Weighted Average Cost of Capital blends the required return of equity holders and debt holders in proportion to each source's weight in the capital structure. The after-tax cost of debt is used because interest is tax-deductible. WACC is the opportunity cost of capital — the return the firm could earn on an equally risky alternative investment.
Depreciation is a non-cash expense that reduces taxable income (EBIT), thereby reducing the tax payable. Adding back depreciation to after-tax earnings gives the actual operating cash flow. The "tax shield" from depreciation is Depreciation × Tax Rate — this amount of tax is saved each year, increasing the project's after-tax cash flows. This is why CF After Tax = EBIT × (1 − t) + Depreciation.
The principle that a rupee today is worth more than a rupee tomorrow because money can be invested to earn a return. DCF converts each future cash flow to its present value by dividing by (1 + WACC)^t, where t is the number of periods. The further in the future a cash flow occurs, the more its present value is reduced.
The simplest depreciation method: the total investment cost is divided equally across all operating years. While tax accounting allows accelerated methods (MACRS, WDV), straight-line is the standard assumption in academic capital budgeting models and gives a conservative picture of tax shields in early years.
For a standalone project, apply these criteria in order:
This can happen with non-conventional cash flows (e.g., large terminal outflows for decommissioning). If the IRR shows "N/A", the cash flow stream has no mathematically unique solution — rely on NPV exclusively. You can verify by looking at the NPV Profile: if the curve does not cross zero cleanly in the 0–50% range, the IRR is outside the observable window or does not exist.
The distance between your current WACC dot and the zero-crossing (IRR) on the NPV Profile is your rate headroom. A project where the teal dot sits far to the left of the IRR crossing is robust — it remains viable even if your WACC estimate is significantly underestimated. A project where the dot is close to the crossing is rate-sensitive and requires careful WACC validation.
If your actual project has different revenue or cost in each year, click any cell in the CF After Tax row to override it. The model will instantly recompute NPV, IRR, Payback, PI, and the NPV Profile chart using your edited values. This makes the tool fully flexible for real-world projects that don't fit a uniform annual pattern.
Export PDF and Save Model are available to Trial and Premium users. Free users can run the full analysis and read every result on-screen; saving and exporting require an account.
| Feature | Free | Trial | Premium |
|---|---|---|---|
| Calculate (full DCF) | ✓ Unlimited | ✓ Unlimited | ✓ Unlimited |
| Export PDF | ✗ Not available | ✓ Unlimited | ✓ Unlimited |
| Save Model | ✗ Not available | Up to 3 models | ✓ Unlimited |
| Load Saved Model | ✗ Not available | ✓ All saved models | ✓ All saved models |
Click ⬇ Export PDF (below the Calculate button) after running the analysis. The PDF is generated entirely in your browser in A4 landscape format and downloaded immediately. It contains:
A model is a snapshot of all your inputs: WACC, Years, Tax Rate, all cash flow entries (amounts, types, descriptions), and all project info fields. Saving lets you return to a previous analysis in any future session.
The Save Model button appears below the Export PDF button once you are logged in with a Trial or Premium account.
Choose a short, memorable name — for example SolarPh1,
FactoryB, or Q3Capex. Saving under an existing
name prompts you to confirm overwrite.
Select a saved model from Load saved model. All inputs are restored and Calculate is run automatically so you pick up exactly where you left off.
| Term | Definition | In this tool |
|---|---|---|
| Net Present Value (NPV) | The sum of all future after-tax cash flows discounted to present value at the cost of capital. Measures total value created (positive) or destroyed (negative) by a project. | Displayed in the NPV metric card. Sum of the entire DCF row in the table. |
| Internal Rate of Return (IRR) | The discount rate at which NPV = 0. The project's implied return on capital invested. Accept when IRR > WACC. | Displayed in the IRR metric card. Visible as the zero-crossing on the NPV Profile chart. |
| Payback Period | The number of years until cumulative after-tax cash flows equal the initial investment. A simple measure of capital recovery speed and risk, but does not account for time value of money. | Displayed in the Payback metric card, in years with fractional precision. |
| Profitability Index (PI) | (NPV + Initial Outlay) ÷ Initial Outlay. Ratios the present value of future benefits to the initial cost. PI > 1 = acceptable. Useful for ranking projects under capital constraints. | Displayed in the PI metric card. |
| WACC | Weighted Average Cost of Capital. The blended required return on a firm's equity and debt, weighted by each source's share of total financing. Used as the discount rate in DCF models. | The WACC slider (1–40%). Appears as the x-position of the teal dot on the NPV Profile. |
| Discounted Cash Flow (DCF) | A valuation method that converts future cash flows to present value by dividing by (1 + rate)^t. The foundation of NPV analysis. | The DCF row in the table. Each cell = CF After Tax ÷ (1 + WACC)^t. |
| EBIT | Earnings Before Interest and Tax. In this tool: Net Inflows + Net Outflows − Depreciation for each operating year. The base on which tax is applied. | Computed internally; displayed implicitly via the Tax row in the table. |
| Depreciation (Straight-Line) | The allocation of asset cost evenly across its useful life. Reduces taxable income without consuming cash, creating a tax shield each year. | Depreciation row in the table. Auto-computed as |Initial Outflows| ÷ Years. |
| Tax Shield | The reduction in tax payable due to a deductible expense (depreciation, interest). Depreciation tax shield = Depreciation × Tax Rate. Increases after-tax cash flows. | Embedded in the CF After Tax row: CF AT = EBIT × (1 − t) + Depreciation. |
| CF After Tax | The actual cash generated by the project after paying tax, with non-cash depreciation added back. For operating years: EBIT × (1 − Tax Rate) + Depreciation. | The CF After Tax row (cream background). Editable — click any cell to override. |
| Initial Cash Flow | Cash flow occurring at time zero (the investment date). Typically a capital expenditure — a negative number. Not discounted (t = 0 factor = 1). | The "Initial" column in the table. Type = Initial in the cash flow form. |
| Terminal / Salvage Value | The residual value of an asset at the end of its useful life, or the cash recovered from winding down a project. Can be positive (asset sale) or negative (cleanup cost). | Modelled as a Final-type cash flow. Appears in the "Final" column. |
| NPV Profile | A chart plotting NPV against all discount rates from 0% to 50%. The intersection with NPV = 0 is the IRR. The slope shows sensitivity of project value to the discount rate. | The chart to the right of the metric cards. Gold line, teal dot at current WACC. |
| Hurdle Rate | The minimum acceptable rate of return on an investment. Often set equal to WACC. A project must earn at least the hurdle rate to be considered for approval. | Represented by the WACC input — the teal dot on the NPV Profile marks it. |
| Capital Budgeting | The process of evaluating and selecting long-term investments that are expected to produce returns over several years. NPV, IRR, Payback, and PI are the standard capital budgeting metrics. | The entire purpose of this tool. |