calculate pay back period

[chinni234]

I am using HP calculator. I understood how to calculate NPV and IRR for given cash flows and discount rate.

I am wondering how to calculate pay back period both with normal cash flows and discounted cash flows using the calculator.

thanks,
Chinni

 

[jods]

With a TI BA II Plus Pro you can directly calculate using the calculator.
But even then if you know the definition of PBP the calculation is very easy to make. Just keep on adding the cashflows till it becomes zero.

 

[engineer2finance]

chinni234 Wrote:
-------------------------------------------------------
> I am using HP calculator. I understood how to
> calculate NPV and IRR for given cash flows and
> discount rate.
>
> I am wondering how to calculate pay back period
> both with normal cash flows and discounted cash
> flows using the calculator.
>
> thanks,
> Chinni

read the manual - it tells you step by step

 

[chinni234]

I am able to get payback time by pressing NPV after each cash flow entry to find when it changes from negative to positive.

Still, I did not find any direct method using HP calculator. I read section 4(Additional financial functions) in manual and also looked at index and did not find anything on payback time.

Could you please let me know if there is a direct method using HP calculator.

Thanks for your help
Chinni

 

[delhirocks]

@ engineer2finance...Could you elaborate on your comment. Which page is that on. Couldn't find it when I skimmed through it

 

[zeroaffinity]

Sort of related here, but one of the fine points in capital budgeting is the difference between payback and discounted payback. I got a couple of practice questions wrong because I was always doing discounted payback, then I finally started looking for the word "discounted". I noticed on the test that they asked a payback question and did NOT indicate that it should be discounted. Obviously they had an answer choice for both, but I went with undiscounted since it didn't indicate otherwise.