Payback period


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payback period

[′pā‚bak ‚pir·ē·əd]
(industrial engineering)
The amount of time required for achieving an amount in profits to offset the cost of a capital expenditure, such as the cost of investment in modifications in an industrial facility for the purpose of conserving energy.

Payback period

A popular nondiscounting project selection technique used when organizations require the capital investment of a project to be recovered within a specified period; the period it takes for the stream of net cash flows to equal the initial investment. Also, a term used in the evaluation of sustainable and renewable energy options, wherein greenhouse or greenhouse intensive energy savings that the technology may enable over its useful life are assessed in relation to the embodied energy required for its manufacture. For renewable energy systems, it can also refer to the period of time over which energy cost savings derived from accessing renewable energy offset the upfront capital costs of the system.
References in periodicals archive ?
If the balance is more than $600, customers can opt for a six-month payback period.
Payback Period--The cost basis divided by the annual energy cost savings per year will tell you your approximate payback period in years.
An Ivy League college like Harvard lives up to its reputation of having the highest cost, but its payback period is longer than a non- A lister like Melbourne Business School.
Rather than a large-scale, expensive approach to energy management, by replacing antiquated boiler systems or installing triple-glazed windows or solar panels; these require significant investments and longer payback periods.
He also felt that the payback period indicated how long HDTV Systems' investment was at risk.
The two most common methods are return on investment (ROI) and payback period.
Wendt says that its 2003 SSE customers have reported rapid returns, with one customer calculating a 60-day payback period.
But considering the scale of the NOx emissions reduction and the additional operating efficiencies to be captured further down the pulp line as a result of the wood handling improvements, Sodra Cell believes that this project's four-year payback period provides an excellent investment.
Sterling Laylock, an Atlanta-based financial advisor, says that consolidating will lower your monthly payments, "but if you stretch the payback period, you may actually pay more over the long run.
And if a user is comparing several systems within a facility, an overall estimated payback period for the entire investment can be easily checked.
It allows up to four operators and machines to share a single shop floor PC, which further reduces the payback period in the hardware investment while increasing machine operator productivity.