The development of a project, as a rule, ends with the calculation of its payback. If, for some reason, the project is recognized as unpromising, its economic indicators change (for example, the cost of materials decreases). How can you calculate the payback of the project and what is required for this?
It is necessary
calculator, pen, notebook, economic indicators of the project
Instructions
Step 1
Calculate the payback period of the project, that is, the time interval after which the project begins to make a profit. Т = К / П, where
T is the payback period, K is the annual capital investment, P is the projected profit. Let's say that in the first year of the project, the enterprise purchased new equipment in the amount of 15 million rubles. In the second year of the project, the enterprise carried out a major overhaul of the shops to improve the work of the department. 2 million rubles were spent on repairs. In the first year, the profit from the project amounted to 5 million rubles, and in the second - 17 million rubles. If the cash flows are not the same throughout the year, quarter or month, it is worth calculating the payback period for each of the above time intervals. In the first and second year, it will be, respectively:
T1 = 15/5 = 3 years
Т2 = 2/17 = 0.11 years, or in about a month the project will pay off with a similar amount of profit.
Step 2
Calculate a simple rate of return or an indicator that indicates how much of an investment is paid off by profit. PIT = NP / IZ, where
PNP - simple rate of return, PE - net profit, IZ - investment costs.
According to our example, the simple rate of return in the first and second years will be, respectively:
PNP1 = 5/15 = 0.33 million rubles, PNP2 = 17/2 = 8.5 million rubles In other words, in the second year of the project, it can be argued that the investments paid off, the project is recognized as promising.
Step 3
Compare your results according to a simple rate of return and payback period. In our example, in the second year of the project, investments begin to work for profit. In about two years and one month, the project will fully pay for itself, which means it can be argued that the investments in the project were not in vain.
