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Jun 14, 2024 · Learn how to calculate the payback period, the length of time it takes to recover the cost of an investment. Find out the advantages and disadvantages of using this metric and see examples of payback period formulas.
Apr 9, 2024 · Payback period formula for even cash flow: When net annual cash inflow is even (i.e., same cash flow every period), the payback period of the project can be computed by simply dividing the initial investment by the annual inflow of cash, as shown by the following formula:
To find exactly when payback occurs, the following formula can be used: Applying the formula to the example, we take the initial investment at its absolute value. The opening and closing period cumulative cash flows are $900,000 and $1,200,000, respectively.
Feb 5, 2024 · Learn how to calculate the payback period, the time required to recoup the cost of an investment, using a simple formula and an Excel template. See examples, illustrations, and a discounted payback period analysis.
Aug 3, 2023 · Learn how to use two formulas to estimate the amount of time it will take to recoup an investment or break even. See examples of how payback period can help investors compare different opportunities and understand risk-reward ratios.
May 3, 2024 · Learn how to calculate payback period, the time required to recover the initial investment in a project or opportunity. See the formula, examples, advantages, disadvantages and related concepts of payback period.
The result of the payback period formula will match how often the cash flows are received. An example would be an initial outflow of $5,000 with $1,000 cash inflows per month. This would result in a 5 month payback period. If the cash inflows were paid annually, then the result would be 5 years.
