There are no financial functions in Excel to find the discounted payback period, the good news however is the availablity of tadXL add-in that offers many financial functions including one to find the DPP. Here me, Abraham A. will take you on a guided tour to find the discounted payback period using the Excel tadDPP function.
All tad Finance products are available for download at this link.
A discounted payback period is used as a tool by an analyst to help find an investor's ROI - return on investment. It refers to the time period required to recover just the initial cost incurred in undertaking the project. Finding it manually is quite cumbersome and time consuming as there are no formulas to find it. Finding discounted payback period in Excel is made possible only when you use 3rd party function such as tadDPP as there no built-in financial functions in Excel to find it. tadDPP is one of the many financial functions that are part of tadXL add-in for Excel 2007, 2010, and 2013.
Before we proceed to find discounted payback period in Excel, you would need the tadXL add-in which is available for download here. There are different versions of this add-in i.e. v0.5, v1.0, v2.0 and v2.5 and you would have to select one of them for installation.
The discounted payback period function in Excel requires the following values as input:
=tadDPP ( discount_rate, cash_flows, type, compounding, period, distribution )
|Discounted Payback period||2.6213||2.0283||2.3557||1.8487||2.6291|
You can download a copy of discounted payback period template here.
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