How to determine the payback period?

**Parishboy** · 10-15-2012, 01:49 PM

Before looking at the workbook Tennis Option Analysis.xlsx, look at the problem below:

In cells B29:C29, enter the payback period (year number) for each option. (Optional Challenge: Write the necessary formulas to automatically calculate the year number in which the cumulative total income exceeds $0.)

For the optional challenge: How do I do this?

You can edit my workbook and resubmit it if you want to.

**Special-K** · 10-15-2012, 03:01 PM

You want to find the first positive value in column D

in B29
=INDEX($A4:$A9,MATCH(TRUE,D4:D9>0,0),0)
Note: Array formula, use Ctrl-Shift-Enter

Copy to C29

In the event you want to put actual years in these cells you should format B29 C29 to general as the format contains a comma, proper years e.g. 2012 appear as 2,012 in these cells

MoneyMaker · 10-15-2012, 04:55 PM

If you have the cash flows in range B4:B9 then you can use tadPP function to calculate the payback period in Excel

By using tadPP function, you won't need to have the extra rows or columns for time periods, or cumulative cash flows.

tadPP takes the series of cash flows and returns the payback period for example

=tadPP(B4:B9)

and that's all you would type in a worksheet cell to find the answer

This online version of TADXL calculator will let you see the results from tadPP function