Payback period calculation example pdfs

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For example, if a project requires a $1000 investment and each year it is expected that the project would bring in $250 cash then the payback period is 4 years (1000/250). That means it would take the project 4 years to recover its initial investment. Discounted Payback Period Calculation. Capturing the period when the cumulative NPV of the project is equal to zero by considering the cost of capital in a project (Bhandari, 2009), the discounted payback period is used in model 2. The For example, if a company invests $300,000 in a new production line, and the production line then produces positive cash flow of $100,000 per year, then the payback period is 3.0 years ($300,000 initial investment ÷ $100,000 annual payback). The formula for the payback method is simplistic: Divide the cash outlay (which is assumed to occur Therefore, the payback period is equal to: Payback Period = 2+ 95/(110) = 2.9 YEARS. As it's not quite common to express time in the format of 2.9 years we can calculate further. 2.9 X 12 MONTHS = 34.4 MONTHS. If you are still not sure How to Calculate Payback period please watch our short instructional video which will help you understand In this video I have explained the Payback Period Technique of Capital Budgeting and I have solved 3 PROBLEMS of Payback Period.After watching this video you