Payback period calculation formula

Payback Period Formula. Payback Period Tutorial - Chapters0000 - Introduction0100 - What is Payback Period0240 - Payback Period Formula Calculation Equal cash flows0423 -.

Payback Period Formula And Calculator

Ln 1 discount rate The following is an example.

. The formula for discounted payback period is. Payback Period Initial Investment Annual Payback. As mentioned above Payback Period is nothing but the number of years it takes to recover the initial cash outlay invested in a particular project.

Investment Annual Net Cash Flow From Asset. As you can see using this payback period calculator. The simple payback period formula is calculated by dividing the cost of the project or investment by its annual cash inflows.

Written out as a formula the payback period calculation could also look like this. Find Cash Flow in Next Year. Investment amount discount rate.

An example would be an initial outflow of 5000 with 1000 cash inflows per month. Enter financial data in your Excel worksheet. The payback period calculation is simple.

Retrieve Last Negative Cash Flow. 100 20 5 years Discounted. Calculate Net Cash Flow.

Cash flow per year. Discounted Payback Period Year before the discounted payback period occurs Cumulative cash flow in year before. The simple payback period formula is calculated by dividing the cost of the project or investment by its annual cash inflows.

It can get a bit tricky when annual net cash flow is expected to vary from year to. Our discounted payback period calculator calculates the discount cash flow accurately and provides you with the complete cash flow in the form of table. - ln 1 -.

By substituting the numbers into the formula you divide the cost of the investment 28120 by the annual net cash flow 7600 to determine the expected payback period of. The formula for the calculations. Perhaps the simplest method for evaluating the feasibility of undertaking a potential investment or project the payback period is a fundamental capital.

How to Calculate the Payback Period. If your data contains both Cash Inflows and Cash Outflows calculate Net Cash flow or Cumulative Cash flow by. For example imagine a company invests 200000 in.

Now we will calculate the cumulative discounted cash flows. Discounted Payback Period. The result of the payback period formula will match how often the cash flows are received.

Calculate The Payback Period With This Formula