Payback period for
Annuity
In this case payback period may be calculated by dividing the
investment with equal cash flow (installment).
Example of Payback for
annuity
ABC wants to start a new project and the project requires
initial investment of $ 500,000. The expected cash flow is $ 200,000 per annum
for ten year. Calculate the payback period
Solution
Payback period = Initial Investment / Cash Flows
= $500,000/$200,000
= 2.5 Years
