This has been a guide to a Payback Period formula. Here, we discuss its uses along with practical examples. We also provide a Payback Period Calculator with a downloadable Excel template. You may also look at the following articles to learn more – Calculation of DuPont Formula ROA Formula C...
Type the formula: =D12 + D15 Press Enter. You’ll get the accurate payback period in years. To convert it to months, in cell D17, input the formula: =D16*12 Press Enter to get the output in months format. Step 7 – Inserting Chart to Show Payback Period in Excel Choose the ra...
The most obvious way to calculate the discounted payback period in Excel is using thePV functionto calculate the present value, then obtaining the payback period of the project. Steps: In cellD5, enter the following formula: =C5 CellC5refers to theCash FlowatYear 0. In cellD6, enter the...
Payback Period Formula In its simplest form, the formula to calculate the payback period involves dividing the cost of the initial investment by the annualcashflow. Payback Period =Initial Investment÷Cash Flow Per Year Where: Initial Investment → Cash Outflow in Period 0 Cash Flow Per Year →...
Payback Period Formula Payback Period = (Initial Investment − Opening Cumulative Cash Flow) / (Closing Cumulative Cash Flow − Opening Cumulative Cash Flow) In essence, the payback period is used very similarly to aBreakeven Analysisbut instead of the number of units to cover fixed costs, it...
How to Calculate the Payback Period in Excel While is it possible to have a single formula to calculate the payback, it is better to split the formula into several partial formulas. This way, it is easier to audit the spreadsheet and fix issues. ...
Payback Period 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. This is ...
What Is the Formula for Payback Period in Excel? First, input the initial investment into a cell (e.g., A3). Then, enter the annual cash flow into another (e.g., A4). To calculate the payback period, enter the following formula in an empty cell: "=A3/A4." The payback period is...
Discounted Payback Period Formula Simple Payback Period vs. Discounted Method Discounted Payback Period Calculator – Excel Model Template Discounted Payback Period Example Calculation What is the Discounted Payback Period? The Discounted Payback Period estimates the time needed for a project to generate eno...
To calculate the payback period using Excel, you can use the PV function. For our example, the formula would look like this: PV(10%,5,-100,-20) This would give you a payback period of 5 years. You can also use the payback period formula to calculate the required rate of return. Th...