Calculation of Pay back period

Payback Period
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Payback Period > Best Practices > Calculation of Pay back period

Calculation of Pay back period
How do we calculate payback period when the returns / cashflows are different each year?

Comment on payback period Tecnique
Tichakunda Gumbo
Your payback period calculation formular is somehow too generalised in that it assumes that all projects will have equal annual cashflows.What about those with different annual cashflows.?

Payback Period if annual cashflows vary?
Jaap de Jonge, Management Consultant, Netherlands
In case the annual cashflows are not the same, the formula is still valid.
Suppose the same project is costing $200.000, but now the annual cashflows are: $30.000 (yr 1), $40.000 (yr 2), $50.000 (yr 3), $40.000 (yr 4), $20.000 (yr 5), $20.000 (yr 6), and $50.000 (yr 7).
After 6 years the total of all cash inflows equals the costs (investments) in the project. Therefore the Payback Period of our project is 6 years.

Good resource
Peter Hansen
I found that this was a very useful website with relevant explanations and examples. Keep up the good work!



Pay back Period
Ade Osunsanmi

Payback period
Gabriel Hogan

Payback Period
Mukela Namushi Mubano, Accountant, Zambia, Member

Many Terms
Azzam Ali, Analyst, Saudi Arabia, Member



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Payback Period
Best Practices
  • Calculation of Pay back period

Payback Period
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