---
title: "ROI and Payback Period Calculator for a Business Purchase"
description: "Enter a purchase cost, the yearly benefit and the years you will use it to see ROI, annualized return and payback period."
url: "https://mcc-solutionsnj.com/bookkeeping/roi-and-payback-calculator"
---

Free tool

# ROI and payback period calculator

Thinking about equipment, software or a vehicle? Enter the cost, the yearly benefit and how long you will use it. See the return and how long it takes to pay for itself.

[![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)

Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software)

Purchase cost ($)

Extra profit or savings per year ($)

Years you will use it

Value at the end ($) (optional)

Prefer to talk it through? [Take the free books check](/bookkeeping/health-check) or [contact us](/contact).

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How it works

## How it works

**ROI** is the total return minus the cost, divided by the cost. **Payback** is the cost divided by the yearly benefit. The annualized return spreads the gain over the years you use the item.

Annual benefit means extra profit or savings, not extra sales. This simple version ignores taxes, financing and the time value of money.

FAQ

## About this calculator

**How do you calculate ROI?**

Subtract the cost from the total return, then divide by the cost. A $10,000 purchase that returns $12,000 over its life has an ROI of 20%.

**What is the payback period?**

The time it takes for the yearly benefit to add up to the cost. A $10,000 purchase that adds $4,000 a year pays back in 2.5 years.

**What should I enter as the annual benefit?**

Extra profit or savings the purchase causes each year, not extra sales. Subtract any added running costs.

**What does this leave out?**

Taxes, financing costs and the time value of money. A dollar next year is worth less than a dollar today, so treat the answer as a rough screen.

**What is the salvage value?**

What you could sell the item for at the end of the period. Leave it at 0 if you expect nothing.

**Is anything saved?**

No. The math runs in your browser and nothing you enter is sent to us.

See a worked example in [how to calculate ROI on a business purchase](/bookkeeping/guides/how-to-calculate-roi-on-a-business-purchase), spread the cost with the [depreciation calculator](/bookkeeping/depreciation-calculator), or find your [break-even point](/bookkeeping/break-even-calculator). More free tools: [Tax deadline calendar](/bookkeeping/tax-deadlines), [Free Excel templates](/bookkeeping/templates), [Business Mileage Log](/bookkeeping/mileage-log-python-script), or [see all free tools](/free-tools).

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### Month-End Close Checklist (PDF)

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General information, not tax or legal advice. [How we write and check our tools](/editorial-standards).

Do it yourself

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Plan the cash, set the budget, price for profit and watch the monthly numbers, in four workbooks that use the same plain method.

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Tallyfinch

### Books you keep on your own computer

Tallyfinch does invoices, bills, bank import, reconciliation and the main reports, in a file you own. $99 once, then $5 a month for updates; the app keeps working if you stop the plan. It does not do payroll or sales tax filing. The free download records up to 60 entries.

[See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) [Download it free](/tools/pro/trial/mccBooks) [Compare the three apps](/software)

## Want books that show what a purchase really paid?

[See bookkeeping](/bookkeeping/)[Call (908) 444-6373](tel:+19084446373)