© Oxford University Press 2011 IP1.9.4 Payback calculations Payback calculations.

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Presentation transcript:

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback calculations

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback time = This is the formula for calculating payback time. Use it to find the payback time in the following scenarios. cost savings per year

© Oxford University Press 2011 IP1.9.4 Payback calculations Jack currently has insulation in his loft that is 50 mm thick. It will cost £250 to increase the insulation to 270 mm. His heating bill will decrease by £100. What is the payback time for adding the extra insulation?

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback time = = 2.5 years £250 £100 per year

© Oxford University Press 2011 IP1.9.4 Payback calculations Emily is thinking about installing solar panels in the roof. They cost £4950 and will reduce her energy bill by £300 each year. What will the payback time be?

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback time = = 16.5 years £4950 £300 per year

© Oxford University Press 2011 IP1.9.4 Payback calculations Ian is considering replacing all the light bulbs in his house with energy efficient light bulbs. Each one costs £5 and will reduce his energy bill by £10. What is the payback time for each light bills?

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback time = = 0.5 year or 6 months £5 £10 per year

© Oxford University Press 2011 IP1.9.4 Payback calculations Kate has installed double glazing throughout her house. It cost her £2000 and will reduce her heating bill by £200 every year. What is the payback time?

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback time = = 10 years £2000 £200 per year

© Oxford University Press 2011 IP1.9.4 Payback calculations Michael is renovating an old house. He is going to install cavity wall insulation. It will cost £800 for the whole house but will reduce his energy bills by £100 a year. What is the payback time?

© Oxford University Press 2011 IP1.9.4 Payback calculations Payback time = = 5 years £800 £160 per year