How to Calculate the Payback Period in Excel

The payback period is the time it takes for a project to recover the investment cost. For example, if you invest $100 and the returns are $50 per year, you will recover your initial investment in two years.

How to Calculate the Payback Period in Excel, illustration

NPV Formula in Excel


The NPV formula in Excel is counterintuitive at first. When I first used it, I made a simple mistake by selecting all the cash flow, including the initial investment. I learned that Excel requires you to select only the future flows and then discount the initial investment from the result, to get the accurate NPV value.


Financial Resources Examples

  • Cash: money or its equivalent.
  • Bank Deposits: money placed into banks, including checking accounts and money market accounts.
  • Holdings of Stocks: publicly traded stocks can be easily converted to cash, and are considerer financial resources of an organization. This stocks are traded on stocks exchanges, like the NASDAQ or the NYSE. It takes only a few minutes to sell stocks on the market.


IRR calculation in Excel

This article teaches you how to calculate the IRR (Internal Return Rate) using Excel. The Excel function to calculate the IRR is “IRR” and it’s really simple, since it only takes the range that contains the flow of funds, including the initial investment.