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#1
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Payback in Years
Hello All,
I am trying to calculate payback in years for an estimated replacement and do not know where to start. I have the following entered in my spreadsheet but cannot figure out how to make a correct formula for the result. Can anyone help? Thanks in advance for your time. Jayne REPAIR COSTS VS. REPLACEMENT Unit Justification Previous 12 Mo Cost to Repair $5,406 Expected 12 Mo Cost to Repair $15,000 Total Repair Costs $20,406 Estimated Replacement Cost $40,000 First Year Savings $(19,594) First Year Less Total Repair Cost $(19,594) Years to Payback |
#2
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Payback in Years
Not sure what you want to use for calculating. You could take 1 year or 10
years to pay something back. It depends on the amounts of each payment made.... "Jayne Mae" wrote: Hello All, I am trying to calculate payback in years for an estimated replacement and do not know where to start. I have the following entered in my spreadsheet but cannot figure out how to make a correct formula for the result. Can anyone help? Thanks in advance for your time. Jayne REPAIR COSTS VS. REPLACEMENT Unit Justification Previous 12 Mo Cost to Repair $5,406 Expected 12 Mo Cost to Repair $15,000 Total Repair Costs $20,406 Estimated Replacement Cost $40,000 First Year Savings $(19,594) First Year Less Total Repair Cost $(19,594) Years to Payback |
#3
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Payback in Years
I am trying to prepare a justification for replacement vehicles in the
capitol budget process. I guess a better way to describe it is I am trying to compare repair costs verses replacement cost, and to give an estimated payback in years. Does this make better sense? My bad for not being clear enough on my first post. "Sean Timmons" wrote: Not sure what you want to use for calculating. You could take 1 year or 10 years to pay something back. It depends on the amounts of each payment made.... "Jayne Mae" wrote: Hello All, I am trying to calculate payback in years for an estimated replacement and do not know where to start. I have the following entered in my spreadsheet but cannot figure out how to make a correct formula for the result. Can anyone help? Thanks in advance for your time. Jayne REPAIR COSTS VS. REPLACEMENT Unit Justification Previous 12 Mo Cost to Repair $5,406 Expected 12 Mo Cost to Repair $15,000 Total Repair Costs $20,406 Estimated Replacement Cost $40,000 First Year Savings $(19,594) First Year Less Total Repair Cost $(19,594) Years to Payback |
#4
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Payback in Years
You're mixing apples and oranges. You've put two years of repair costs in
one (last year's and this year's), and you haven't factored in the future repair costs of the new vehicle. You need to do the following: 1. Cost of new vehicle ($40,000) is PV (present value). 2. Annual savings in repair costs (cost for new vehicle less cost for old vehicle) is your PMT 3. What is the cost of money (eg, company's internal rate of return, "hurdle rate", cost to borrow)? Now feed these three number into the NPER function, and you will have your payback period. Regards, Fred. "Jayne Mae" wrote in message ... Hello All, I am trying to calculate payback in years for an estimated replacement and do not know where to start. I have the following entered in my spreadsheet but cannot figure out how to make a correct formula for the result. Can anyone help? Thanks in advance for your time. Jayne REPAIR COSTS VS. REPLACEMENT Unit Justification Previous 12 Mo Cost to Repair $5,406 Expected 12 Mo Cost to Repair $15,000 Total Repair Costs $20,406 Estimated Replacement Cost $40,000 First Year Savings $(19,594) First Year Less Total Repair Cost $(19,594) Years to Payback |
#5
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Payback in Years
Thanks Fred. I will slap away the fruit flies and give it a try :-)
"Fred Smith" wrote: You're mixing apples and oranges. You've put two years of repair costs in one (last year's and this year's), and you haven't factored in the future repair costs of the new vehicle. You need to do the following: 1. Cost of new vehicle ($40,000) is PV (present value). 2. Annual savings in repair costs (cost for new vehicle less cost for old vehicle) is your PMT 3. What is the cost of money (eg, company's internal rate of return, "hurdle rate", cost to borrow)? Now feed these three number into the NPER function, and you will have your payback period. Regards, Fred. "Jayne Mae" wrote in message ... Hello All, I am trying to calculate payback in years for an estimated replacement and do not know where to start. I have the following entered in my spreadsheet but cannot figure out how to make a correct formula for the result. Can anyone help? Thanks in advance for your time. Jayne REPAIR COSTS VS. REPLACEMENT Unit Justification Previous 12 Mo Cost to Repair $5,406 Expected 12 Mo Cost to Repair $15,000 Total Repair Costs $20,406 Estimated Replacement Cost $40,000 First Year Savings $(19,594) First Year Less Total Repair Cost $(19,594) Years to Payback |
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