Difference between revisions of "Pay back period"

Revision as of 18:39, 27 August 2020

Pay back period

@@ Line 1: / Line 1: @@
-The length of time required to recover the cost of an investment. Calculated as
+Pay back period
-'''Pay back period''' = <math>\frac{Cost of Project}{Annual Cash Inflows}</math>
-Using the following example:
-{| class="wikitable"
-!Project
-!\[C_0\]
-!\[C_1\]
-!\[C_2\]
-!\[C_3\]
-!Payback
-!NPV at 10%
-|-
-|A
-|-2000
-|500
-|500
-|5000
-|3
-|+2624
-|-
-|B
-|-2000
-|500
-|1800
-|0
-|2
-|-58
-|-
-|C
-|-2000
-|1800
-|500
-|0
-|2
-|+50
-|-
-|}
-# The payback rule ignores all cash flows after the cut off date.
-# The payback rule gives equal weight to all cash flows before the cutoff date.
 [[Category:finance]]