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Payback period. Payback period in capital budgeting refers to the time required to recoup the funds expended in an investment, or to reach the break-even point. [1] For example, a $1000 investment made at the start of year 1 which returned $500 at the end of year 1 and year 2 respectively would have a two-year payback period.
Amortization schedule An amortization schedule is a table detailing each periodic payment on an amortizing loan (typically a mortgage), as generated by an amortization calculator. [1] Amortization refers to the process of paying off a debt (often from a loan or mortgage) over time through regular payments. [2] A portion of each payment is for interest while the remaining amount is applied ...
The hurdle rate determines how rapidly the value of the dollar decreases out in time, which, parenthetically, is a significant factor in determining the payback period for the capital project when discounting forecast savings and spending back to present-day terms.
The major variables in a mortgage calculation include loan principal, balance, periodic compound interest rate, number of payments per year, total number of payments and the regular payment amount. More complex calculators can take into account other costs associated with a mortgage, such as local and state taxes, and insurance.
Amortization calculator. An amortization calculator is used to determine the periodic payment amount due on a loan (typically a mortgage), based on the amortization process. The amortization repayment model factors varying amounts of both interest and principal into every installment, though the total amount of each payment is the same.
For calculations involving annuities, it must be decided whether the payments are made at the end of each period (known as an ordinary annuity), or at the beginning of each period (known as an annuity due). When using a financial calculator or a spreadsheet, it can usually be set for either calculation.
Return period A return period, also known as a recurrence interval or repeat interval, is an average time or an estimated average time between events such as earthquakes, floods, [1] landslides, [2] or river discharge flows to occur.
Discounted payback period. The discounted payback period (DPB) is the amount of time that it takes (in years) for the initial cost of a project to equal to the discounted value of expected cash flows, or the time it takes to break even from an investment. [1] It is the period in which the cumulative net present value of a project equals zero.