Payback Period

Accounting Dictionary

Payback Period

Payback period is the amount of time a company must wait to recoup the money it spent purchasing a certain piece of equipment.

Let’s say John bought a snow-cone machine for $1,000. He thinks he can earn $500 in profit in each year with this machine. $1,000/ 500 =2. It will take two years for John to make $1,000, to be repaid for his investment.

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