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I apologize in advance for another short comment, but your reply leads to another interesting point: should entities (individual, companies) be using payback pe
by mtr 16y ago
I apologize in advance for another short comment, but your reply leads to another interesting point: should entities (individual, companies) be using payback period as a criteria for investments? Everything I learned in b-school pointed us towards using NPV as the best metric, but many entities still use IRR or payback period. I'll try to follow-up tomorrow with some numeric examples so you and everyone else can see the implications of various methods. But the stuff I saw from calculations in France (the most generous market for building-integrated photovoltaic installations) was on the order of 10 years.
Your 6-year payback seems a bit optimistic but I last looked into this stuff 8 months ago and things may have changed.
- roel_v 16y agoNo, payback period is a silly metric, and my 6 years do account for opportunity cost :) Actually I tried to make a product out of this. The website is still up on http://www.solar-profit.info/ http://www.solar-profit.info/. It's in Dutch but the screenshots speak for themselves. I never sold a single copy, for one because my market is about 500 customers big, and second because I didn't manage to explain the concept of time value of money to my leads (installation companies for PV panels). So yeah that's the answer to your comment. Payback period everybody understands, and that's the only thing it has going for it, but unfortunately it's such a big advantage that you still need to use it if you want to convince some markets.