How to calculate the payback period of equipment

The payback period of equipment is an economic indicator that must be calculated in the analysis and planning of economic activity. It characterizes the time for which the money spent on the acquisition of another means of production will be returned in full through the use of the unit.

Instruction manual

1

First, determine the amount that the company is willing to allocate for the purchase of new equipment. Directly include the acquisition cost, as well as the costs associated with installation and commissioning. For example, if you plan to acquire an additional conveyor that will allow you to redistribute the load, then in the "Capital investments" parameter, calculate the price of the device, the amount of delivery, the cost of installation and commissioning. However, if all the preparatory measures were carried out by a staff member of the company, and therefore the organization managed to avoid additional costs, then nothing needs to be added in addition to the purchase costs.

2

Calculate the amount of gross income received from the use of equipment. For example, if in a new oven 500 loaves of bread are baked per month and sold at a price of 20 r per unit of goods, and the cost of raw materials at the rate of one loaf is 5 r, then the gross profit will be 7500 r (7500 = (20 r - 5 p) * 500). At the same time, the costs of maintaining the salary fund are not taken into account, but if additional personnel are hired to service the equipment, then the payments to the newly hired employees must be taken into account. Tax deductions should be ignored - in any case, they will depend on the total amount of income. Thus, gross income is the difference between the selling price and the cost of production; in trade, the sum of the premiums.

3

Substitute the found indicators in the formula: T = K / VD, where T is the payback period; K - capital investments; VD - gross income. When calculating the payback period, you can take any time interval. If a quarter is selected, then the amount of gross income is also taken from the calculation for 3 calendar months.

4

Instead of the profitability indicator, you can substitute the amount of savings that will become possible after the introduction of an additional unit of equipment, because according to popular wisdom, "Saved - that means earned."