Equipment Purchase ROI Analysis Template

Calculating the Return on Investment (ROI) for a piece of equipment involves considering several factors to accurately assess its financial impact. This template lets you enter assumptions about initial capital expenditure and future benefit in order to see a range of IRRs, ROIs, and NPVs over a 120 month period. I love new spreadsheets and this one will provide value to many industries.

$45.00 USD

After purchase, the template will be immediately available to download. This is also including in the templates for Accountants, manufacturing, and sensitivity tables bundle.

equipment roi

Template Features:

  • Model up to 120 months of operations
  • Inputs for purchase price / installation costs
  • Inputs for ongoing maintenance, energy, debt service
  • Inputs for expected monthly increase to revenue and labor savings
  • Three sensitivity tables to show ROI, IRR, and NPV based on varying purchase prices and monthly benefit.
  • Monthly and annual financial summary
  • DCF Analysis / discount rate
  • Salvage value

Some factors to consider when buying new equipment or used:

  • Initial Purchase Price: The upfront cost of acquiring the equipment.
  • Installation and Setup Costs: Expenses related to installing and preparing the equipment for use, which may include shipping, assembly, and specialized labor.
  • Operational Costs: Ongoing expenses such as energy consumption, regular maintenance, repairs, and supplies or materials needed for the equipment to function.
  • Depreciation: The reduction in the equipment's value over time. This is important for accounting purposes and tax deductions.
  • Financing Costs: If the equipment is financed, the interest and fees associated with the loan need to be factored in.
  • Training Costs: Expenses for training employees to use the new equipment effectively.
  • Productivity Gains: The increase in output or efficiency due to the new equipment. This could be measured in terms of higher production volumes, faster service, or improved quality, translating into increased revenues.
  • Savings on Labor Costs: If the equipment automates tasks that were previously done manually, it can lead to savings in labor costs.
  • Quality Improvements: Better quality products or services can lead to higher customer satisfaction and potentially higher prices.
  • Resale Value: The expected value of the equipment at the end of its useful life in your business.
  • Tax Benefits: Including any tax deductions or credits that can be claimed due to the investment in equipment.
  • Opportunity Costs: The cost of the next best alternative foregone by investing in the equipment.
  • Environmental Impact and Compliance Costs: If the equipment impacts your company’s environmental footprint or involves compliance with regulations.
  • Downtime and Disruption Costs: Costs associated with implementing the new equipment, such as temporary reduction in productivity during installation and transition.
  • Risk Factors: Potential risks, such as equipment failure, changes in market demand, or technological obsolescence.
  • Impact on Employee Morale and Customer Satisfaction: Indirect impacts that might translate into financial outcomes, such as improved employee morale leading to better productivity or enhanced customer satisfaction leading to increased loyalty and sales.

By thoroughly assessing these factors, a business can determine the true ROI of a piece of equipment, considering not only the direct financial impact but also the indirect effects on operations and overall business strategy.

Also, check out this financial model to analyze an equipment rental business.

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