This payback period template will help you visualize and determine the period of time a company takes to recoup its investment.
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The Payback Period shows how long it takes for a business to recoup its investment. This type of analysis allows firms to compare alternative investment opportunities and decide on a project that returns its investment in the shortest time, if that criteria is important to them.
Payback Period = (Initial Investment − Opening Cumulative Cash Flow) / (Closing Cumulative Cash Flow − Opening Cumulative Cash Flow)
In essence, the payback period is used very similarly to a Breakeven Analysis but instead of the number of units to cover fixed costs, it considers the amount of time required to return the investment.
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