Economic Cost Calculator

Economic Calculator

The Economic Calculator helps farmers and agricultural enterprises evaluate and compare the financial costs and benefits of adopting digital technologies. It uses the Net Present Value (NPV) approach to determine whether an investment in digital technology is financially worthwhile over time. The NPV analysis compares the present value of all expected benefits (inflows) with the present value of all costs (outflows) associated with the adoption of the technology.

Costs

New equipment
Training
Economic Calculator - Costs vs Benefits

Benefits

Greater income
Faster Operations

Goal of the Economic Calculator

Within the CODECS project, this tool is designed to compare economic performance before and after digitalisation and to assess whether investments in digital technologies improve the profitability of a farm or agricultural enterprise. It is a simple, easy-to-use tool that provides preliminary insights to support farm-level decision-making. Users are encouraged to consult a financial advisor before making any long-term investment or farm-planning decisions.

See example

Methodology

The Economic Calculator uses the Net Present Value (NPV) methodology. NPV represents the sum of the present values of future net cash flows (benefits minus costs) over the investment period, accounting at a user-defined rate.

The NPV formula is:

Net Present Value Formula

where r is the discount rate, t is the year and n is the number of years of the investment.
The figure below shows in a simple roadmap on how the tool works:

1. Investment
Specify the Investment
  • Define the scope of the analysis (type of technology and time frame)
  • List all changes in costs and benefits expected from adopting the digital technology
2. Calculator
Use the Calculator to estimate the NPV
  • Enter annual costs, benefits, investment period, and discount rate into the calculator
  • Run the calculation to obtain your NPV result
3. Analysis
Interpret Results & Run Sensitivity Analysis
  • Assess NPV >0 indicates economic viability; <0 indicates the investment is not justified
  • Test how results change with key variables (e.g., modify the discount rate)

Evaluate Your Investment

Use the Economic Calculator to compare costs and benefits of digital technologies. Find out if your investment will pay off over time.

GO TO CALCULATOR