Payback Period

Hi. i am struggling in Payback period? Can any one explain how to get a payback period? Thanks


  • PeterC
    PeterC Registered, Tutor Posts: 243 Dedicated contributor ? ? ?
    There is a fairly simple explanation in the Encyclopaedia of Accounting, see
  • rakeshsuwal
    rakeshsuwal Registered Posts: 79
    pay back period is simply a cash flow check, just look at the cumulative figure, when it goes to plus figure from negative. take the last figure and check which year was it as number of years, and take last negative figure/(next net cash flow i.e. how much you going to make)*12(to convert to months). you may have to round up to what ever question ask like to nearest month eg. 4.12 will be 4 months, where are some question may say to make it to next month. in this case it was over 4 months so treat as 5 months.
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