Investment appraisal for SMEs · detailed fictional case
Calculate the potential. Plan investments that fit your business.
I assess the financial contribution an investment could make and how it fits your business payments. For several investments, I connect benefits, dependencies, timing and financing in an editable model.
One business. Several projects. One connected financial plan.
A fictional metalworking and installation business wants to modernise its buildings. Its workshop hall needs a new roof regardless of the other projects. The owner is also considering solar PV, a heating upgrade and a green roof on the separate office annex.
Essential work
Replace the hall roof
€90,000
Required anyway in this case. Completed before installing solar PV.
Optional project 1
Solar PV on the hall
€165,000
Use electricity on site and export the remainder.
Optional project 2
Upgrade the heating
€95,000
Replace gas heating with a heat pump.
Optional project 3
Green the office roof
€40,000
Separate roof area; assess savings and other objectives separately.
Every investment figure is invented and excludes VAT. Roof replacement and solar PV concern the hall; the green roof concerns the office annex. Structural suitability and engineering design require specialist assessment in a real project.
02 · Information
The calculation starts with your records.
In a real project, existing offers, energy bills and financial records often provide much of the information needed. Uncertain figures remain visible as assumptions.
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Source
Model input
What I examine
Offers and payment schedules
Capital costs, deposits and completion dates
Completeness, additional costs and shared work
Energy bills and specialist engineering plans
Consumption, generation, efficiency and operating hours
Plausibility and whether generation and use coincide
Bank balances, unpaid invoices and operating plan
Opening cash, existing receipts and payments
Payment dates, ongoing commitments and an appropriate reserve
Finance offer and potential grant
Drawdown, interest, principal and grant payment date
Conditions, uncertainty and funds available when needed
1 · Inputs in the calculated example workbook
An actual model extract. Package 2 = staged implementation; assumption case 0 = baseline without a grant. Blue fields can be edited.
03 · Traceable calculation
Start with solar PV: where do the savings come from?
For a full operating year, we assume 145,000 kWh of solar electricity. Before the heating upgrade, the business uses 60% on site. Purchased electricity costs €0.24/kWh in the example; exported electricity earns €0.06/kWh. These are invented assumptions, not current tariffs.
01 · On-site use
Buy less electricity
145,000 kWh × 60% × €0.24
€20,880
87,000 kWh replaces electricity from the grid.
02 · Electricity export
Export the remainder
145,000 kWh × 40% × €0.06
€3,480
58,000 kWh is exported and paid for separately.
03 · Annual contribution
Deduct operating costs
€20,880 + €3,480 − €3,000
€21,360
Additional annual net operating cash benefit, before financing and income tax.
What simple payback shows, and what it leaves out
€165,000 ÷ €21,360 = approximately 7.7 years. This estimate holds generation and prices constant. It ignores the timing value of future cash flows and replacement costs. The combined long-term calculation below works monthly and includes declining generation and replacements.
04 · Interactions
Solar PV and heating work together.
The heating saves gas and needs electricity.
We assume 300,000 kWh of useful heat each year, 90% efficiency for the existing gas system and a seasonal performance factor of 3 for the heat pump. At €0.10/kWh of gas, the calculation before additional PV use is:
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Step
Calculation
Annual
Gas purchases avoided
300,000 ÷ 0.90 × €0.10
€33,333
New electricity demand
300,000 ÷ 3 × €0.24
−€24,000
Lower maintenance
€2,200 − €1,500
€700
Additional annual contribution
before extra PV use
€10,033
Use it on site rather than export it.
In the early implementation package, the model allocates a further 15,767 kWh of solar electricity to heating in 2028. Its additional value is the electricity purchase avoided less the export income forgone: 15,767 kWh × (€0.24 − €0.06) ≈ €2,838 for the year. Those kWh are not also counted as exported electricity.
The example uses monthly summer and winter profiles. Up to 25% of monthly heating electricity demand is covered by remaining solar output. This simplified overlap does not replace load-profile analysis or engineering design; specialist planning supplies that evidence.
05 · Plan available cash
Savings arrive later. Invoices arrive first.
The staged package pays for the required roof in two instalments in 2027. Solar PV requires a 30% deposit in April and 70% at commissioning in June. The business first pays the VAT-inclusive invoices; the assumed input VAT refund arrives the following month.
April 2027 · roof and PV deposit
€54,000 roof + €49,500 PV = €103,500 net; the VAT-inclusive payment is €123,165.
€215,835
Closing cash
June 2027 · solar PV starts
The final PV invoice is €137,445 including VAT. The first additional PV cash benefit is €3,761 including the assumed VAT effect.
€123,816
Closing cash
July 2027 · assumed VAT refund
The simplified June VAT settlement produces an approximately €21,345 refund. Only now does it improve cash.
€156,921
Closing cash
June in the staged package: what remains in the bank?
Rounded to whole euros. In this package, June has no new loan payments, grant or VAT settlement from May.
2 · Cash plan, January to June 2027
An actual model extract, package 2 without a grant. D is January; I is June. Negative VAT values represent refunds; amounts in brackets are negative.
The reserve is part of the decision.
The fictional owner wants €65,000 for a delayed customer payment and €25,000 for an unexpected payment. This gives a €90,000 minimum cash reserve after planned payments.
The reserve is invented for this case. For your business, we relate it to actual commitments and risks. Month-end balances do not reveal shortages within a month; weekly or due-date planning can be added when needed.
Agreed reserve in this case€90,000
€65,000 for a delayed customer payment + €25,000 for an unexpected payment
06 · Common comparison
Three packages show the cash available and its cost.
All packages use the same existing business plan and required roof replacement. They differ in the timing of the three optional projects and new financing.
Implementation package
1 · Early, using own funds
Solar PV, heating and the green roof start contributing in 2027. Cash leaves the bank earlier, but savings also start earlier.
Implementation package
2 · Staged, using own funds
Solar PV starts in 2027, heating in 2028 and the green roof in 2029. Installing the green roof later adds €4,000 for renewed site setup and connection work.
Implementation package
3 · Early, partly financed
Projects start as in package 1. An assumed €250,000 loan finances part of the optional investments.
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Completion / commissioning
Package 1
Package 2
Package 3
Required hall roof
April 2027
April 2027
April 2027
Solar PV
June 2027
June 2027
June 2027
New heating
September 2027
September 2028
September 2027
Office green roof
May 2027
May 2029
May 2027
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Baseline without grant
Package 1
Package 2
Package 3
Investment payments net, 36 months
€390,000
€394,000
€390,000
Lowest month-end cash
€44,845
€123,816
€254,269
Month of lowest balance
September 2027
June 2027
June 2027
Shortfall against €90,000 reserve
€45,155
€0
€0
NPV of optional projects
€57,195
€51,028
€57,195
Additional net operating cash benefit, 2027
€20,509
€14,084
€20,509
New interest and principal, 2028
€0
€0
€36,615
New loan balance, end of 2029
€0
€0
€193,750
A loan provides financing, not additional profit.
The example assumes 5% annual interest and monthly principal payments of €2,083 from October 2027. Drawdowns follow the optional investment invoices. Interest and principal total approximately €36,615 in 2028. The additional net operating cash benefit is approximately €35,352 in the same year: it does not fully cover debt service on its own. Existing operations contribute to it. At the end of 2029, €193,750 remains outstanding. Real financing must suit the business’s terms, security and ability to pay.
How net present value is calculated
For every month from January 2027 to December 2046, the model records additional operating cash benefits, optional capital and replacement costs and, where selected, the purely hypothetical grant. Future amounts are discounted to January 2027 at 6% annually. A positive NPV means that the package exceeds that assumed required return.
NPV = sum of (additional operating cash benefit − optional capital and replacement costs + assumed grant) ÷ 1.06^(month ÷ 12).
The required roof replacement is included in the complete cash plan but excluded from incremental NPV: the common reference plan would also incur it. Financing and income tax are excluded from NPV. Packages 1 and 3 therefore have the same project NPV. This is neither a bank balance nor profit after tax.
07 · Compare assumptions
What happens when an assumption changes?
Compare three implementation packages and five calculated assumption cases. The chart shows all three packages with the same change. The initial selection is staged implementation without a grant.
Lowest month-end cash€123,816June 2027
Shortfall against reserve€0€0 = reserve maintained
Net present value€51,02820 years · before financing and income tax
Highest new loan balance€0within the 36-month plan
Interest and principal, 2028€0additional debt service
2 · Staged, using own funds: June 2027 closes with €123,816 after planned payments. The reserve is maintained, with €33,816 remaining above it.
Cash of the entire business · 2027–2029
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1 · Early, using own funds2 · Staged, using own funds3 · Early, partly financed€90,000 reserve
2 · Staged, using own funds · 0 · Baseline without grant
View all 36 months of the selected package
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2 · Staged, using own funds · 0 · Baseline without grant
Month
Existing cash surplus
Investment payments incl. VAT
Additional operating cash benefit incl. VAT
VAT paid / refund negative
Loan + grant − debt service
Closing cash
New loan balance
January 2027
€10,000
€0
€0
€0
€0
€340,000
€0
February 2027
€8,000
€42,840
€0
€0
€0
€305,160
€0
March 2027
€15,000
€0
€0
-€6,840
€0
€327,000
€0
April 2027
€12,000
€123,165
€0
€0
€0
€215,835
€0
May 2027
€12,000
€0
€0
-€19,665
€0
€247,500
€0
June 2027
€10,000
€137,445
€3,761
€0
€0
€123,816
€0
July 2027
€8,000
€0
€3,761
-€21,345
€0
€156,921
€0
August 2027
€12,000
€0
€3,181
€600
€0
€171,502
€0
September 2027
€18,000
€0
€2,601
€508
€0
€191,595
€0
October 2027
€15,000
€0
€1,732
€415
€0
€207,912
€0
November 2027
€15,000
€0
€1,152
€276
€0
€223,787
€0
December 2027
€22,000
€0
€572
€184
€0
€246,175
€0
January 2028
€10,000
€0
€282
€91
€0
€256,366
€0
February 2028
€8,000
€0
€572
€45
€0
€264,893
€0
March 2028
€15,000
€0
€1,732
€91
€0
€281,534
€0
April 2028
€12,000
€0
€2,601
€276
€0
€295,859
€0
May 2028
€12,000
€0
€3,471
€415
€0
€310,914
€0
June 2028
€10,000
€0
€3,741
€554
€0
€324,101
€0
July 2028
€8,000
€33,915
€3,741
€597
€0
€301,329
€0
August 2028
€12,000
€0
€3,164
-€4,818
€0
€321,310
€0
September 2028
€18,000
€79,135
€2,985
€505
€0
€262,656
€0
October 2028
€15,000
€0
€3,108
-€12,158
€0
€292,922
€0
November 2028
€15,000
€0
€3,387
€496
€0
€310,813
€0
December 2028
€22,000
€0
€3,229
€541
€0
€335,501
€0
January 2029
€10,000
€0
€2,595
€516
€0
€347,581
€0
February 2029
€8,000
€0
€2,674
€414
€0
€357,841
€0
March 2029
€15,000
€15,708
€3,766
€427
€0
€360,472
€0
April 2029
€12,000
€0
€3,809
-€1,907
€0
€378,187
€0
May 2029
€12,000
€36,652
€4,101
€608
€0
€357,028
€0
June 2029
€10,000
€0
€4,040
-€5,225
€0
€376,294
€0
July 2029
€8,000
€0
€3,876
€617
€0
€387,552
€0
August 2029
€12,000
€0
€3,302
€591
€0
€402,263
€0
September 2029
€18,000
€0
€3,057
€499
€0
€422,821
€0
October 2029
€15,000
€0
€3,184
€460
€0
€440,544
€0
November 2029
€15,000
€0
€3,463
€480
€0
€458,526
€0
December 2029
€22,000
€0
€3,309
€525
€0
€483,310
€0
The table separates capital payments, operating effects, VAT and financing. Existing cash surplus = existing receipts less existing payments. Every amount is in euros, rounded.
Capital costs +15% affects the required roof, all optional projects and later replacements. Energy prices −20% reduces purchased electricity, export remuneration and gas prices together. The hypothetical grant is paid three months after heating commissioning; in the delayed case it is paid nine months afterwards. No specific grant scheme is claimed.
Further assumptions and limits of the example
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Area
Model assumption
Existing operations
€330,000 available on 1 January 2027. The assumed €157,000 annual cash surplus already includes running energy costs, existing taxes and existing finance. The monthly pattern repeats in 2028 and 2029.
Payment timing
Roof: 40% in February, 60% in April 2027. Optional projects: 30% two months before commissioning, 70% in the commissioning month. Benefits begin at commissioning; the example assumes savings and revenue affect cash in the same month.
VAT
Simplified assumption: 19% on eligible investments and taxable operating effects, settled the following month. The assumed green-roof fee reduction has no VAT. This is not a tax assessment.
Long-term calculation
Common horizon: January 2027 to December 2046. Prices remain constant in nominal terms. PV generation falls by 0.5% after every twelve operating months. The reference case assumes continued operation of the existing heating system; its technical feasibility must be checked in a real project.
Replacement costs and residual value
€12,000 net PV replacement costs twelve years after PV starts; heating replacement at its assumed capital cost fifteen years after commissioning. No residual value at the end of 2046. The example does not extend the horizon for delayed commissioning.
Profit and taxes
The workbook separately shows incremental operating profit after simplified depreciation. The cash benefits highlighted here are before additional income tax. Its effect and actual payment dates must be added for a real decision.
New financing
Package 3 only: up to €250,000 debt, 5% annual interest on opening monthly debt, no interest on new drawdowns in their drawdown month, 120 calculated monthly principal instalments from October 2027. No fees or commitment interest assumed.
Grant
No grant in the baseline. €15,000 in two optional assumption cases illustrates payment timing only. Eligibility, amount and conditions have not been assessed.
You receive a working model you can update yourself.
In the full multi-project model, inputs, calculations and results stay connected. You can change an offer price or move a commissioning date and see the consequences.
Translate your records I turn your information into appropriate, documented inputs.
Calculate alternatives Costs, savings, payment dates and financing are assessed together.
Keep using the model At handover, I explain the fields, calculations and limits. Ongoing support is available if needed.
Editable demonstration with one active implementation package and assumption case. Four worksheets containing formulas. Every figure is invented; a client model is tailored to your business and agreed scope.
3 · Overview of the staged baseline package
An actual model extract. The overview uses figures from the cash plan and long-term calculation. A dash means zero; brackets indicate negative amounts.
09 · The right starting point
A single-project check and a multi-project model have different scopes.
We start with a free conversation. Then we agree which analysis answers your question and the fee for that work.
Investment Check
Review one defined investment
€1,500 net
The focused Investment Check typically covers one clearly defined project using existing offers and data. You receive a written assessment and a closing conversation.
Fixed fee for the described scope, agreed in advance. A complete multi-project model is not included.
A pipeline with several investments, interactions, longer-term cash planning and financing requires more work. Its fee is higher than the focused single-project check.
Outcome, information needed, alternatives, timeframe and the higher fee are agreed separately before engagement. This example illustrates that broader expertise.
I am Roman Braun, founder of Deistermind. I connect commercial information with the decision your business faces. I develop the appropriate calculation and explain what the results support and which questions remain open.
Does the calculation replace engineering or tax advice?
No. I assess and model the commercial side. Engineering design, energy advice and tax treatment remain with the appropriate specialists. Their findings inform the calculation.
Do all investments need to be decided already?
No. The initial conversation can also identify which alternatives are useful to compare and which information is still needed.
Is a grant required?
Not automatically. I first calculate a traceable reference case. If a potential grant becomes decisive, eligibility, conditions and payment timing are examined separately.
Free initial conversation
Which investment do you want to decide on sound financial grounds?
Describe your project in a free initial conversation without obligation. I then propose an appropriate scope, from a single-project check to connected planning for several investments.
