calculating payback period. formula payback period = initial investment net annual savings + income
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Other considerations Are there additional costs associated with the project? Additional Staff Time? Additional maintenance fees? Additional energy costs?TRANSCRIPT
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CALCULATING PAYBACK PERIOD
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Formula
Payback Period = Initial InvestmentNet annual savings +
Income
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Other considerations Are there additional costs associated
with the project?
Additional Staff Time? Additional maintenance fees? Additional energy costs?
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Payback Period ExampleYou are currently spending $15,000/yr in hauling fees to have
cardboard recyled. You learn that if you bale the cardboard, you can get paid market price per ton for the bales. The cost of a baler is $12,000 and the current market price of bales is $80/ton. You produce approximately 100 tons of cardboard per year.
Payback Period = $12,000 = 0.52 year $15,000 + $8000
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Payback Period Exercise-LED Retrofit
Calculate Your Current CostsAfter you’ve gathered the information, you can use it to determine the current costs to your business. To calculate the existing energy use in kWh: existing fixture quantity x fixture wattage x hours per year = kWh
` 1000Calculate the total yearly energy costs:
kWh x utility rateCalculate the yearly maintenance costs: total number of lamps x $6 (estimated industry average)
- See more at: http://solutions.borderstates.com/how-to-calculate-led-lighting-retrofit-roi-with-tools-and-formulas#sthash.UVsdwZVA.dpuf
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Payback Period Exercise-LED Retrofit
Calculate the Proposed System's Costs1) Determine how much energy the proposed LED system will use in kWh per year: kWh= proposed fixture quantity x LED fixture wattage x hours per year 10002) Find the total yearly energy cost for the proposed LED system: Total Yearly Energy Cost =kWh x utility rate3) Calculate the installation costs of the new system: Installation Cost = proposed fixture quantity x installation cost per fixture4) Calculate the total fixture cost: proposed fixture quantity x proposed fixture cost5) The total cost for the proposed LED system is determined by: total installation cost + total fixture cost
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