Payback Period | Explained With Examples

In this lesson, we explain what the Payback Period is, why it is calculated and the Payback Period Formula. We go through some Payback Period Examples and calculations and also explain the advantages and disadvantages of the Payback Period. We also explain the comparison between the Payback Period, the Internal Rate of Return (IRR), and the Net Present Value (NPV).
Payback period in years, months, and days: • Payback Period | Expla...
Net Present Value (NPV) Calculation Example Using Table: • Net Present Value (NPV...
IRR (Internal Rate of Return) Explained with Example: • IRR (Internal Rate of ...
Profitability Index | Explained with Examples: • Profitability Index | ...
Net Present Value (NPV) Calculation Example Using Excel: • Net Present Value (NPV...
NPV & IRR | BA II PLUS (Texas Instrument): • NPV & IRR | BA II PLUS...
Check out other straight-forward examples on our channel.
We also offer one-on-one tutorials at reasonable rates.
Connect with us:
Email: [e-mail]
Our Website: Counttuts.com
Our Facebook Page: / counttuts

[@caleboundo7673]

This is a recommendable tutorial site. Anyone studying finance should be visiting this site for revision

[@aishazahara2546]

It's really enjoyable

[@sihleshandu5901]

Hi there , to gets the months after a year, am i wring to multiply by 12 instaed of multiplying by 365?
which one is accurate because i saw one lecture mutliplying by 12 instead of 365,
can yiu elaborate on that, or there is something to take note of on the question?

[@jamesleftlion]

Very helpful, thanks. Even with the annoying adverts every couple of minutes.

[@amyyrah]

Thank you so much, I literally understood by watching the first example 😊😊😊

[@KhalidOsman-nd3mw]

it is highly recommended to follow this lesson

[@farmacybydon8978]

You are a God sent 👼.... thank you so much you have put sense in my stubborn brain

[@fetcherent3934]

you helped me in financial accounting and i nailed the paper

[@nestusjonathan6288]

Your explanation is the best.

[@amyyrah]

Really it is,…….

[@laurentkamara2837]

thank so much for this teaching it helps me understand the payback period very well

[@nihadrzk3632]

Your explanation is the best, thank you !

[@simransingh4031]

Thank you so much. Extremely helpful🙏🙌

[@josephmissa5244]

It's very impressive 👏👏
Thanks 🙏🙏

[@joychiyowele2370]

Great lesson, well explained. Thumbs up

[@jacksonkingkafwanka2497]

This is good and great explanation. You have made my work easier,

[@malcolmjohnston6731]

Great explanation as usual thanks. You guys need to do more/better marketing to help more folks.

[@hm4004]

Thank you for your professional support and help. With Regards.

[@andreacomesana2828]

excellent explanations! thank you very much

[@linneajohansson3796]

Thank you for a great explaination and examples!!

[@khalidmohameddahir6283]

this video helps me a lot thankz you so much

[@kizzaflavia7900]

Thanks so much 🙏 the video was helpful

[@haniabdulazizaden833]

Thank you so much God bless you 🙏

[@eugeeniita1616]

great explanation...thank you so much💯👏

[@princekanengoni4012]

That was awesome 👏👏

[@reginasibesomashetankwilim6017]

Good one. You made it easy to understand

[@nancymakonnen1622]

Execellent explantion, thank you

[@Sensei_muha2015]

Thank You very much, it helps a lot

[@blessedhute245]

Well explained ,I understood.

[@symplytomi5178]

Thank you 👏👏

[@EMMYCHRIS1]

Well done. Good job

[@margaretmhlanga1316]

Thank you l have been helped by this video

[@fredrickkiiruwanjiru-lifec2446]

nice one , keep up the tutorials

[@makomberamon]

well explained thank you

[@nkocycindy2455]

thank you so much for the learning

[@LilianManyax]

Nice 👍❤

[@fanashaa3130]

Thank u so much.

[@msizinxumalo6585]

Thank you

[@slindilelindy3484]

Thanks you 😌

[@karabomatlokotsi4878]

The video came in really handy.....awesome job !!!!

[@SisekoMfecane]

Thank you bhudda❤

[@nancynasimiyu5466]

Thanks

[@ziziphobusie9571]

Thank you!!!

[@motshabimogotsi6654]

Gosh I have amounts that need to be calculated which the table consist of the cash flows and net profit per year, do i add the net profit to the net cash flows or what? im so confused

[@dylantagarira]

thanks soo much

[@BlessedHopeChabalala]

Thank you 🙏🏻

[@emmanuelsithole6654]

Does anyone else notice that the lecture's calculated answers are not the same when u put it using your own calculator?. even the 1st example. the real answer is 3.001 and the second example the real answer is 2.002191781

[@nomhlemaramba5939]

Its because you are adding putting the days as years if you calculate correctly without mixing the years and days you can get the correct answer he is very good

[@thembekatg1172]

Super👍

[@JacquiMification]

How is payback calculated should a payment not be completed in the allocated years?

[@escapismcity1175]

I'm writing tomorrow and I still don't know 🤕

[@fetcherent3934]

when doing the initial calculation, Don't we start with year zero for better results or we still get the same answers

[@ZED_official0]

What happens when your cash flows don't add up to your initial investment?

[@lydiaamulungu9123]

I have a question can i start with year 0 with my initial cost for instance example 2 starting with 90000

[@fetcherent3934]

in example 1, what do we do with the salvage value, the cost of capital and the tax rate?

[@SandraBusolo-zf4zb]

I have enjoyed the lesson thank you

[@deborahmwanganjye846]

Thank you so much for this content.

[@farahey_]

what if the question does not giving the cash flow?? 😔😔😔

[@queeniyah4514]

Thank you so much🙏🏽❤️

[@keesharawf2654]

thankyouu!

[@travellers111]

amazing sir, rea leboga

[@stevenjuguna4888]

Question. What was the point of the 10% cost of capital and a 30% Tax rate? It wasn't used anywhere in the calculations.

[@Counttuts]

We did not need them for calculating the Payback Period. If you were asked to calculate the NPV for instance, you would then need the cost of capital.

[@monicawanyonyi2713]

What about the 10% cost of capital en 30%tax rate where is it used ,because it's also on the question

[@johndavids4008]

what happens when the investment period ends in year 4 and in the same year the full recovery takes place . I tried that with the formulae,however i got a negative answer. what am i doing wrong?

[@Counttuts]

Good day, due to the volume of requests for help regarding student specific questions, we are not able to address them on this platform. However, you can request a session at reasonable rates with us at [e-mail] to address your challenges with the subject.

[@mohamedabdullahi8047]

@@Counttuts hi

[@peterchellowilpard1972]

Harry Ltd is considering an investment in a new machine, either Machine A or Machine B. Both machines would have an expected life of five years and would be depreciated on a straight-line basis.
The following information is available: (N$000)
Machine A Machine B
Initial cost A 400 B 560
Residual value A 50 B 60
Accounting profits;
A B
Year 1 60 50
Year 2 70 60
Year 3 70 80
Year 4 40 70
Year 5 30 40
Harry Ltd.’s cost of capital is 12% per annum for which the discount factors are:
Year 1 0.893
Year 2 0.797
Year 3 0.712
Year 4 0.636
Year 5 0.567
how do i calculate the pay back there? and the NPV Because all i am getting is negative answers

[@Counttuts]

Good day, due to the volume of requests for help regarding student specific questions, we are not able to address them on this platform. However, you can request a session at reasonable rates with us at [e-mail] to address your challenges with the subject.

[@raziashakk198]

What happens if the years are mor than the years given . How do you calculate that .

[@Counttuts]

That is not possible, check your calculations properly. The only other instance is not being able to recover the initial investment by the end of the investment period. In that case, there is no payback peeiod as the money will not be recovered. If you require further assistance, you can book a session here: [e-mail].

[@blxckapple4939]

What if you don't the recovery money with within the 5 years

[@diz533]

Why is the subtitle disabled?

[@georgemichael5899]

what if the project cant pay the investment within the time period ?

[@Counttuts]

Then according to the payback period, the project should be rejected because if the entity invests in the project, it will not be able to recover its investment.

[@by_nm219]

Hello sir,
Do we have to round off to days or we can leave the answer in decimals for years?

[@haneefahmusa]

Sir !..how did u get 266.19days..I got 1.998032241*10 ^-3 using d calculator

[@Counttuts]

Good day, I don't understand your calculation above, but if you follow the formula you should get the same answer I got.

[@hm4004]

@@Counttuts
€132000÷€81000×365
=266.19
I hope this helps.
With Regards

[@touchygoldy2919]

Greetings sir
For pay back period I'm not getting the same answer as yours even after doing you case study.
Thank u

[@Rose-xo8mx]

Why dont you take depreciation in first question

[@DerekAghanama-np9ur]

Explain npv

[@Amantle.Molifi]

What if they didn't give you the investment money

[@thabelomarvellous7039]

I got 294 days

[@evanspaulmuwonge1511]

So cute

[@diz533]

I got 2 years, 297 days

[@diz533]

Too confused

[@manjipulse5144]

awesome

[@subintcherian1624]

Thank you, bro, this is a very useful video.

[@daneciaruiters207]

Thank you so much for this

[@siyasangagoqweni8072]

thank you so much

[@amukelaniaffection3040]

Thank you so much

[@fetcherent3934]

Thank you so much

[@subinagurung222]

Thankyou so much sir

[@akellosharonveronica5598]

Thank so much