Payback period

Investing – investing money or property rights in the development of an object/ project. The attractiveness of investments primarily depends on the period after which the investor will receive a net income. This is the main indicator on which the decision to grant a loan is based.

When forming an investment portfolio, many factors are taken into account. But the initial calculation is based on determining the payback period. These can be investments in a startup or an object that requires economic recovery, such as – reorienting an enterprise, implying staff expansion and the purchase of new equipment.

Taken into account:
• amount of initial investments;
• number of years during which the investment funds will be frozen;
• estimated annual cash flows.

The simplest way – is to use an online calculator to calculate the payback period of investments. For a more accurate analysis, it is necessary to consider the discount and liquidation value of the object/project. More attractive to the investor are long-term projects where the payback period of investments is much shorter than the period during which the borrower will use the provided funds on the terms of the lender.