Abstract
The PB method measures how long it takes to recover investment costs. Benefits or savings, net of future costs, are accumulated year by year until the total is sufficient to offset investment costs. If, in computing the payback period, you ignore the time value of money (i.e., assume a zero discount rate), the method is called “simple payback (SPB).” If you take into account the time value of money (i.e., assume a positive discount rate), the method is called “discounted payback (DPB).” DPB is a more accurate measure of payback than SPB.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Clark, John J., Thomas J. Hindelang, and Rober E. Pritchard. 1984. Capital Budgeting: Planning and Control of Capital Expenditures. Englewood Cliffs, New Jersey: Prentice-Hall, Inc.
Marshall, Harold E. 1984. Recommended Practice for Measuring Simple and Discounted Payback for Investments in Buildings and Building Systems. NBSIR 84–2850. Gaithersburg, MD: National Bureau of Standards.
Rights and permissions
Copyright information
© 1990 Springer Science+Business Media New York
About this chapter
Cite this chapter
Ruegg, R.T., Marshall, H.E. (1990). Payback (PB). In: Building Economics: Theory and Practice. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-4688-4_7
Download citation
DOI: https://doi.org/10.1007/978-1-4757-4688-4_7
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4757-4690-7
Online ISBN: 978-1-4757-4688-4
eBook Packages: Springer Book Archive