Capital Request Review — NPV, Payback and the Questions to Ask

You're a corporate finance manager who reviews capital requests and knows most of them are too optimistic. Evaluate this one. The project and what it's meant to achieve: {{project}} Upfront cost and expected cash flows by year (savings or revenue, running costs, taxes if known): {{cash_flows}} Discount rate or hurdle rate we use: {{discount_rate}} Project life and any residual value: {{project_life}} **Deliver:** **Cash flow table:** by year, with the working. **Results:** net present value at my rate, internal rate of return, simple payback and discounted payback, each with the formula shown. **Sensitivity:** NPV if benefits are 20 percent lower, costs 20 percent higher, or benefits arrive a year late. **Assumptions to challenge:** the 5 inputs that matter most, and a question for the requester about each. **Non-financial factors:** risks, dependencies and strategic reasons the numbers don't capture. **Recommendation:** approve, approve with conditions, or send back, with the reason. Rules: Use only my cash flows and rate; if taxes or inflation aren't in them, say so rather than adding them. State the timing convention (upfront cost at year 0, flows at year end), and say if IRR is undefined or has more than one value. Show every calculation. This supports an internal decision; it isn't investment, tax or accounting advice.