How would I go about preparing a payback period analysis when: the inital investment time: 65 million Deprication of life investments: 20 years sales price of lumber per unit 50 dollars varable costs per lumber unit 6 dollars fixed costs 40 million quantity of lumber units year one capacity: 0 quantity of lumber units year two capacity: 8 million quantity of lumber units year three till year 20: 12 million Income tax rate 40% and with the intention to sell back: 100,000 gallons of waste costing 30 dollars a gallon with the total revenue from the material 3 million Solution From the above it is clear that the pay back will be in two years as sum of PAT of year One and two is more than 65million the Investment made initially .

1. How would I go about preparing a payback period analysis when:
the inital investment time: 65 million
Deprication of life investments: 20 years
sales price of lumber per unit 50 dollars
varable costs per lumber unit 6 dollars
fixed costs 40 million
quantity of lumber units year one capacity: 0
quantity of lumber units year two capacity: 8 million
quantity of lumber units year three till year 20: 12 million
Income tax rate 40%
and with the intention to sell back: 100,000 gallons of waste costing 30 dollars a gallon with the
total revenue from the material 3 million
Solution
From the above it is clear that the pay back will be in two years as sum of PAT of year One and
two is more than 65million the Investment made initially
All figures In Million $
Initial Investment 65
Depreciation 20 years 3.25 St line
Time years 1yr 2.yr 3.yr 4.yr
Rate 50 50.00 50.00 50.00
Qt 0 8.00 12.00 12.00

2. Revenue Sales 0 400.00 600.00 600.00
Rate 6 6.00 6.00 6.00
Variable Cost 0 48.00 72.00 72.00
Fixed Cost 40 40.00 40.00 40.00
Depreciation 3.25 3.25 3.25 3.25
Net Operating Income -43.25 308.75 484.75 484.75
Revenue Waste 0 0.11 0.16 0.16
PBT -43.25 308.86 484.91 484.91
ITAX(40%) 123.54 193.96 193.96
PAT -43.25 185.32 290.95 290.95