Welcome to the Course on the Payback Method
Aim
The ability to communicate financial details is important when determining a project's feasibility and convincing investors of an idea's value. This teaching material provides an understanding of how to calculate the “payback” period of an investment to evaluate the financial feasibility of a product, business, or service. It introduces fixed costs, variable costs, and revenue to show how to calculate the time it takes for a venture to move from loss-making to profit-making. Uncertainty in the payback prediction can be explored by calculating best- and worst-case scenarios for costs and revenues.
Learning Outcome
Evaluate the market potential, costing and feasibility of a design solution using industry standard methods, considering the effects of uncertainty.
- Understand the reasons to calculate and present financial information of projects.
- Understand the terms fixed cost, variable cost, revenue, and payback.
- Calculate the payback for a project.
- Understand how to deal with uncertainty in financial predictions.
How to Use This Material
Working in your teams, read through the material page by page. For each page, discuss the content together and think about how it applies to your project. Ask questions and ensure everyone is confident before moving from one page to the next.