Industrial Equipment, Machinery & Capital Goods worked example

Capital Equipment Payback with total capital equipment investment of 1,125,000 $: a worked example

What does the result look like when total capital equipment investment reaches 1,125,000 $? The full calculation is worked below with real intermediate numbers. Use it when screening a machine purchase, automation cell, test stand, tooling upgrade, or productivity project before a detailed capital request.

The inputs for this scenario

  • Total capital equipment investment: 1,125,000 $ (raised for this scenario; the documented default is 450,000)
  • Annual operating savings: 165,000 $ / yr (unchanged)
  • Annual support and ownership cost: 28,000 $ / yr (unchanged)

Working through the calculation

  • Applying the documented formula (Net annual savings = annual operating savings - annual support and ownership cost) to the inputs above produces each figure below.
  • At this operating point the engine returns 8.21 yr for capital equipment payback period, the number this scenario is built around.
  • At this operating point the engine returns 137,000 $ / yr for net annual savings.
  • At this operating point the engine returns 1,125,000 $ for total capital equipment investment.
  • At this operating point the engine returns -440,000 $ for five-year net capital equipment value.

How this compares with the baseline

  • Against the tool's baseline example, where total capital equipment investment sits at 450,000 $ and the headline result is 3.28 yr, this scenario comes in 150% above the baseline at 8.21 yr.
  • A figure at this level is achievable when total capital equipment investment is genuinely sustained, not just peaked for a shift. Undiscounted payback ignores the time value of money, equipment life beyond the payback point, and tax depreciation, so it ranks projects but does not value them fully.

Results at a glance

  • Capital equipment payback period: 8.21 yr (headline result)
  • Net annual savings: 137,000 $ / yr
  • Total capital equipment investment: 1,125,000 $
  • Five-year net capital equipment value: -440,000 $

Run it with your numbers

  • Every input above is editable in the live Capital Equipment Payback calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.