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What is Average Payback Period
Average Payback Period is a method that indicates in what time the initial investment should be repaid ( at a uniform implementation of cash flows).

Average Payback Period, usually not abbreviated. It is a method that indicates in what time the initial investment should be repaid (at a uniform implementation of cash flows).

Calculation:

Average Payback Period calculation

where:

  • t … average payback period
  • øCF … average annual return
  • C0 … initial investment

Use of the average payback period in practice: In the enterprise it used by CFO in assessing the effectiveness of the investment. Nowadays, this method is used more rarely.

Related terms and methods:

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Last update: 09.09.2015

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