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npv-irr-calculator skill

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This skill helps you evaluate project investments by computing NPV, IRR, MIRR, payback, and profitability with configurable assumptions.

npx playbooks add skill a5c-ai/babysitter --skill npv-irr-calculator

Review the files below or copy the command above to add this skill to your agents.

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SKILL.md

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---
name: npv-irr-calculator
description: Calculate project financial metrics for investment decision making
allowed-tools:
  - Read
  - Write
  - Glob
  - Grep
  - Bash
metadata:
  specialization: project-management
  domain: business
  category: Financial Analysis
  id: SK-009
---

# NPV/IRR Calculator

## Overview

The NPV/IRR Calculator skill provides comprehensive financial analysis for project investment decisions. It calculates key financial metrics including Net Present Value, Internal Rate of Return, payback periods, and profitability indices to support business case development and portfolio prioritization.

## Capabilities

### Core Financial Metrics
- Calculate Net Present Value (NPV) with configurable discount rates
- Calculate Internal Rate of Return (IRR)
- Calculate Modified Internal Rate of Return (MIRR)
- Calculate payback period (simple and discounted)
- Calculate Profitability Index (PI) / Benefit-Cost Ratio

### Cash Flow Analysis
- Generate cash flow projections
- Model operating vs. capital expenditures
- Calculate cumulative cash flows
- Support irregular cash flow timing
- Handle multiple currency conversions

### Sensitivity Analysis
- Perform sensitivity analysis on key assumptions
- Generate tornado diagrams
- Calculate break-even points
- Model scenario comparisons (base, optimistic, pessimistic)
- Assess assumption risk ranges

### Advanced Features
- Support weighted average cost of capital (WACC)
- Calculate economic value added (EVA)
- Model inflation adjustments
- Compare mutually exclusive projects
- Generate investment summary reports

## Usage

### Input Requirements
- Initial investment amounts
- Projected cash flows by period
- Discount rate(s)
- Project duration
- Optional: Inflation rates, tax considerations

### Output Deliverables
- NPV calculation with present value breakdown
- IRR and MIRR calculations
- Payback analysis (simple and discounted)
- Profitability Index
- Sensitivity analysis charts

### Example Use Cases
1. **Business Case**: Calculate project financial viability
2. **Portfolio Selection**: Compare project investments
3. **Go/No-Go Decision**: Evaluate investment threshold
4. **Budget Justification**: Demonstrate financial benefits

## Process Integration

This skill integrates with the following processes:
- Business Case Development
- budget-development.js
- portfolio-prioritization.js
- benefits-realization.js

## Dependencies

- Financial mathematics libraries
- Numerical computation utilities
- Visualization libraries
- Currency conversion services

## Related Skills

- SK-004: EVM Calculator
- SK-011: Benefits Tracking Dashboard
- SK-013: Portfolio Optimization

Overview

This skill calculates core project financial metrics to support investment decision making. It delivers NPV, IRR, MIRR, payback periods, and profitability indices, plus cash-flow modeling and sensitivity analysis. Results are packaged for business cases, portfolio comparisons, and go/no-go decisions.

How this skill works

Provide initial investments, period cash flows, discount rates, project duration and optional parameters (inflation, taxes, WACC). The skill computes present values, iterates to find IRR/MIRR, derives payback timings (simple and discounted), and builds sensitivity scenarios. It can produce cumulative cash flows, profitability indices, and visual summaries for scenario comparison.

When to use it

Evaluating a single project’s financial viability before approval
Comparing multiple, mutually exclusive investment opportunities
Building a budget justification or business case with quantified benefits
Prioritizing a project portfolio under limited capital
Testing how changes in assumptions affect project outcomes

Best practices

Provide consistent time periods and clearly separate operating vs. capital cash flows
Use realistic discount rates (WACC or project-specific) and document assumptions
Run base/optimistic/pessimistic scenarios and include sensitivity ranges
Include inflation and tax impacts when they materially affect cash flows
Validate IRR roots by checking multiple starting guesses for irregular cash flows

Example use cases

Business case: calculate NPV, IRR and payback to justify funding for a new product line
Portfolio selection: rank projects by NPV and profitability index under a capital constraint
Go/No-Go: determine whether IRR exceeds the required hurdle rate for investment approval
Budget justification: quantify discounted benefits over project lifetime for stakeholders
Risk assessment: generate tornado diagrams to show which assumptions drive value

FAQ

Can the skill handle irregular or uneven cash flow timing?

Yes. It supports irregular timing and computes discounted cash flows using provided period dates or fractional periods.

How is MIRR calculated and when should I use it?

MIRR reinvests positive cash flows at a specified reinvestment rate and finances negatives at a finance rate; use it when the standard IRR’s multiple-root behavior or unrealistic reinvestment assumptions are a concern.