I was conducting Excel training a few weeks ago when one of the participants was asking me how to use Excel to calculate pay back period. He asked specifically for that because Excel has provided a complete set of formulas for financial calculations. This includes formulas to calculate Net Present Value (commonly known as NPV), Internal Rate of Returns (IRR), Present Value (PV), Future Value (FV), etc.

Financial formulas are commonly used to evaluate business investments, as to whether it is viable to invest in a particular project. What is unknown to most people is that these financial formulas could be used by individuals as well. One example is in evaluating insurance policies. I thought of using insurance policy because my participants are mostly working in other functional areas and would be less interested in the solution if I were to use a business scenario to present the solution on the payback period. Using an insurance policy is helpful in arousing the interest of the participants because they are likely to purchase or have purchased some insurance policies

See this payback page for the solution.

    1 Response to "Payback Period"

    • Angelo

      Thank you! I´m using the 2007 version and there aren´t a formula about pay back. It´s nice to use this arithmetic way to comprehend the whole payback process.

Leave a Reply