Payback Period Excel Model
Originally published: 29/03/2021 07:30
Publication number: ELQ-92412-1
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Payback Period Excel Model

The template is an effective measure of risk by highlighting the number of years to recover the initial investment

Description
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
This is a highly versatile, very sophisticated financial model template, and is also user-friendly.
If you have any inquiries, modification request or other requests of assistance to customize the model template for your business case please contact us here: https://www.eloquens.com/channel/ecorporatefinance

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