Cost–benefit analysis.
Net Present Value, benefit-cost ratio, and payback year — with an optional discount rate for dollars that arrive later.
3.0%
How much future dollars are worth less than today's. 3% is a common default; use 7–10% if you're comparing to stock-market returns.
Money in, money out, by year.
$
Yr
$
Yr
$
Yr
NPV
$2,487
B/C Ratio
1.45
Payback
Year 3
The math says this pays off.
Yr 0
-$5,000
Yr 1
-$3,544
Yr 2
-$715.90
Yr 3
$2,487
Three numbers, one verdict.
NPV is every future dollar discounted back to today and added up. Positive means the benefits outweigh the costs at your discount rate.
B/C ratio above 1.0 means each dollar of cost returns more than a dollar of benefit. The higher, the better.
Payback is the first year the cumulative discounted total turns positive. Longer paybacks are riskier — more can go wrong before you break even.