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Help Needed: Payback period Formula

  • 07-04-2010 5:47pm
    #1
    Mickeyie05
    Closed Accounts Posts: 167 ✭✭


    Hi does anyone know what the formula is for payback period?

    Here is the situation, A certain amount of capital investment is made and the savings increase by 5% each year and i want to calculate the payback period


Comments

  • #2
    quentingargan
    Registered Users, Registered Users 2 Posts: 1,627 ✭✭✭quentingargan


    Mickeyie05 wrote: »
    Hi does anyone know what the formula is for payback period?

    Here is the situation, A certain amount of capital investment is made and the savings increase by 5% each year and i want to calculate the payback period
    You should be able to work this on an Excel spreadsheet. I've worked this the opposite way around using an interest calculator which I stitch into spreadsheets, but the simplest option is to put your annual savings into, say, Cell A1, make cell a2 =a1*.05 and then copy a2 into a3, 4, 5 etc.
    B2 should be A1 + A2, B3 should be B2+A3 etc., and that will give you the annual return.

    HOWEVER, you should strictly also work out what you would have got if you'd stuffed your dosh into the bank, who might offer a rate of 3% if you stitch up your money until after all the guarantees run out!


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