Calculator uses following formulas:

Discounting factor for periodical payment

Discounting factor for periodical payment

Discounting factor for single payment

Discounting factor for single payment

Annuity factor

Annuity factor

Payback time method:

Acquisition cost / annual savings

Present value method:

Periodical payment factor * annual savings – acquisition cost + ( residual value * single payment factor )

Annuity method:

Annual savings – { annuity factor * [ acquisition cost – ( residual value * single payment factor )]}

 

More about investments in this post.

 

 

 

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