Payback Period Excel Template

What is payback period?

The payback period helps to determine the length of time required to recover the initial cash flow outlay in the project or investment, simply it is the method used to calculate the time required the earn back the cash invested through the successful cash inflows

 Why payback is important

The payback period is an effective measure of investment risk. The period with a shorter payback period has less risk than with the project or investment with longer payback period. The payback period is often used when liquidity is an important criterion to choose a project

Payback in capital budgeting

In capital budgeting, the payback period is the selection criteria, or deciding factor, that most business rely on to choose among potential capital projects. Small business and large alike tend to focus on project with a likelihood or faster, more profitable payback.

The template includes regular and discount payback

The regular payback period is number of years necessary to recover the funds invested without taking the time value into accounts

The discounted payback is number of years necessary to recover the funds invested taking into consideration the time value of the money

 Key inputs in the green tabs

 Fill the green cells only

Key outcome in the dark blue tabs             

The inputs in the green cells will dynamically flow into the following below:

  • Regular payback period
  • Discounted payback period
  • Dashboard

Conclusion and customization

Highly versatile, very sophisticated financial template and friendly user

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