Payback Period

Payback Period Use this worksheet to calculate the payback period of an investment. The payback period is the number of periods (usually years) that it takes to recover the initial investment from the operating cash flows. Be sure to enter the initial investment as a negative cash flow. You should use caution when evaluating an investment by using the payback period calculation since it does not utilize time value of money calculations and therefore assumes that a present day dollar is equal to a future dollar. The payback period calculation should be used in conjunction with time value of money calculations such as Net Present Value and Internal Rate of Return. To view the template, click the worksheet tab labeled Template at the bottom of the screen or press Ctrl-PgDn. With the exception of data entry cells, all cells are protected. Use the Tab key to move from one unprotected cell to the next. Copyright © KMT Software, Inc. All Rights Reserved.

Payback Period December 21, 2003 Investment Description: Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 The payback period in years is:

Cash flows Initial Investment