What Is Payback Period With Example?

What Is Payback Period With Example? Payback Period = Initial Investment / Annual Payback. For example, imagine a company invests $200,000 in new manufacturing equipment which results in a positive cash flow of $50,000 per year. Payback Period = $200,000 / $50,000. In this case, the payback period would be 4.0 years because 200,0000 divided

Is Payback Period Discounted?

Is Payback Period Discounted? The discounted payback period is a capital budgeting procedure used to determine the profitability of a project. A discounted payback period gives the number of years it takes to break even from undertaking the initial expenditure, by discounting future cash flows and recognizing the time value of money. How do you

What Is The Investment Equation?

What Is The Investment Equation? Investment is the amount of goods purchased or accumulated per unit time which are not consumed at the present time. … Thus investment is everything that remains of total expenditure after consumption, government spending, and net exports are subtracted (i.e. I = GDP − C − G − NX ).

How Do You Calculate Payback Period For Equipment?

How Do You Calculate Payback Period For Equipment? Answer: The payback period is calculated by dividing the total investment costs by the amount of yearly savings. These yearly savings are calculated by multiplying the energy price by the amount of kWh one can save on a yearly basis. What is the equation for payback period?