How to calculate the payback period when income is reinvested? [closed]

The payback period is calculated by dividing the amount of the investment by the annual cash flow.

What is the formula for calculating NPV?

The NPV formula. It’s important to understand exactly how the NPV formula works in Excel and the math behind it. NPV = F / [ (1 + r)^n ] where, PV = Present Value, F = Future payment (cash flow), r = Discount rate, n = the number of periods in the future is based on future cash flows.

How do you calculate NPV using a calculator?

Quote: Button on the second row down and that asks us for an interest rate I which is going to be 10. Then we press enter. And then if we go down. It's got net present value equals.

What is net present value example?

Example: Let us say you can get 10% interest on your money.



Your $1,000 now becomes $1,100 next year. So $1,000 now is the same as $1,100 next year (at 10% interest): We say that $1,100 next year has a Present Value of $1,000. Because $1,000 can become $1,100 in one year (at 10% interest).