Certified Bookkeeper<\/a> the subtraction method, one starts by subtracting individual annual cash flows from the initial investment amount, and then does the division. By following these simple steps, you can easily calculate the payback period in Excel. Using Excel provides an accurate and straightforward way to determine the profitability of potential investments and is a valuable tool for businesses of all sizes. The breakeven point is a specific price or value that an investment or project must reach so that the initial cost of that investment or project is completely returned. Whereas the payback period refers to the time it takes to reach the breakeven point.<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"In reality, projects are unlikely to have constant annual projected returns. In this case, setting up a table in Excel will help evaluate and estimate the payback period. When deciding whether to invest in a project or when comparing projects having different returns, a decision based on payback period is relatively complex. 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