Payback Period worksheet

1. Payback period (years): 4.98

1. Add up the cash flows, after taking off the cost, until the total is about to reach zero. After year 4, it's still -$9,800.00

   $\mathrm{\$5,000.00}+\mathrm{\$5,000.00}+\mathrm{\$6,000.00}+\mathrm{\$8,200.00}-\mathrm{\$34,000.00}$$=\mathrm{-\$9,800.00}$

2. Year 5 brings in $10,000.00. Only part of it is needed to cover the remaining $9,800.00, so add that fraction to 4

   $4+\frac{\mathrm{\$9,800.00}}{\mathrm{\$10,000.00}}$$=4.98$

2. Payback period (months): 5.82

1. The same cash comes back every month, so divide the cost by the cash per month to see how many months it takes

   $\frac{\mathrm{\$32,000.00}}{\mathrm{\$5,500.00}}$$=5.818182$

2. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 5%)^k, where k is its month number. Then repeat. The running total turns positive during month 8

   $7+\frac{\mathrm{\$174.95}}{\mathrm{\$3,722.62}}$$=7.046996$

3. Payback period (years): 4.01

1. Add up the cash flows, after taking off the cost, until the total is about to reach zero. After year 4, it's still -$100.00

   $\mathrm{\$5,500.00}+\mathrm{\$6,900.00}+\mathrm{\$9,500.00}+\mathrm{\$10,000.00}-\mathrm{\$32,000.00}$$=\mathrm{-\$100.00}$

2. Year 5 brings in $11,000.00. Only part of it is needed to cover the remaining $100.00, so add that fraction to 4

   $4+\frac{\mathrm{\$100.00}}{\mathrm{\$11,000.00}}$$=4.009091$

3. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 6%)^k, where k is its year number. Then repeat. The running total turns positive during year 5

   $4+\frac{\mathrm{\$4,773.03}}{\mathrm{\$8,219.84}}$$=4.580671$

4. Payback period (months): 4.16

1. Add up the cash flows, after taking off the cost, until the total is about to reach zero. After month 4, it's still -$1,450.00

   $\mathrm{\$3,800.00}+\mathrm{\$5,750.00}+\mathrm{\$5,000.00}+\mathrm{\$9,000.00}-\mathrm{\$25,000.00}$$=\mathrm{-\$1,450.00}$

2. Month 5 brings in $9,000.00. Only part of it is needed to cover the remaining $1,450.00, so add that fraction to 4

   $4+\frac{\mathrm{\$1,450.00}}{\mathrm{\$9,000.00}}$$=4.161111$

5. Payback period (years): 5.45

1. The same cash comes back every year, so divide the cost by the cash per year to see how many years it takes

   $\frac{\mathrm{\$30,000.00}}{\mathrm{\$5,500.00}}$$=5.454545$

2. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 7%)^k, where k is its year number. Then repeat. The running total turns positive during year 8

   $7+\frac{\mathrm{\$358.91}}{\mathrm{\$3,201.05}}$$=7.112122$

6. Payback period (months): 6.74

1. The same cash comes back every month, so divide the cost by the cash per month to see how many months it takes

   $\frac{\mathrm{\$32,000.00}}{\mathrm{\$4,750.00}}$$=6.736842$

2. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 6%)^k, where k is its month number. Then repeat. The running total turns positive during month 9

   $8+\frac{\mathrm{\$2,503.48}}{\mathrm{\$2,811.52}}$$=8.890437$

7. Payback period (years): 5

1. The same cash comes back every year, so divide the cost by the cash per year to see how many years it takes

   $\frac{\mathrm{\$30,000.00}}{\mathrm{\$6,000.00}}$$=5$

2. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 8%)^k, where k is its year number. Then repeat. The running total turns positive during year 7

   $6+\frac{\mathrm{\$2,262.72}}{\mathrm{\$3,500.94}}$$=6.646318$

8. Payback period (years): 4.67

1. The same cash comes back every year, so divide the cost by the cash per year to see how many years it takes

   $\frac{\mathrm{\$28,000.00}}{\mathrm{\$6,000.00}}$$=4.666667$

2. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 9%)^k, where k is its year number. Then repeat. The running total turns positive during year 7

   $6+\frac{\mathrm{\$1,084.49}}{\mathrm{\$3,282.21}}$$=6.330415$

9. Payback period (years): 3.79

1. Add up the cash flows, after taking off the cost, until the total is about to reach zero. After year 3, it's still -$7,150.00

   $\mathrm{\$3,600.00}+\mathrm{\$5,000.00}+\mathrm{\$9,250.00}-\mathrm{\$25,000.00}$$=\mathrm{-\$7,150.00}$

2. Year 4 brings in $9,000.00. Only part of it is needed to cover the remaining $7,150.00, so add that fraction to 3

   $3+\frac{\mathrm{\$7,150.00}}{\mathrm{\$9,000.00}}$$=3.794444$

3. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 7%)^k, where k is its year number. Then repeat. The running total turns positive during year 5

   $4+\frac{\mathrm{\$2,851.51}}{\mathrm{\$5,703.89}}$$=4.499923$

10. Payback period (years): 3.38

1. Add up the cash flows, after taking off the cost, until the total is about to reach zero. After year 3, it's still -$4,000.00

   $\mathrm{\$3,500.00}+\mathrm{\$7,500.00}+\mathrm{\$9,000.00}-\mathrm{\$24,000.00}$$=\mathrm{-\$4,000.00}$

2. Year 4 brings in $10,500.00. Only part of it is needed to cover the remaining $4,000.00, so add that fraction to 3

   $3+\frac{\mathrm{\$4,000.00}}{\mathrm{\$10,500.00}}$$=3.380952$

3. For the discounted payback, first shrink each cash flow to today's dollars by dividing by (1 + 7%)^k, where k is its year number. Then repeat. The running total turns positive during year 4

   $3+\frac{\mathrm{\$6,831.50}}{\mathrm{\$8,010.40}}$$=3.852829$