What is payback time?
Payback time is basically where, for example, you bought double glazing for your home for x amount, payback time is the time it takes to save that x amount of money (from heating bills etc) because of the change you made (double glazing).
Sounds confusing but it's quite simple really.
Here's a question
Q1a) This is the amount of energy an uninsulated house loses every second from different parts of the house.
- Roof - 150J
- Windows - 109J
- Floor - 75J
- Draughts - 66J
- Walls - 200J
Q1ai) Each year the house costs £760 to heat. How much money is being lost through heat loss through the roof?
METHOD) 150+109+75+66+200=600 You add all the energy lost amounts.
-------- x150=£190(rounded) Your answer would be £190
Then you divide the total amount of money spent to heat the house by the total energy lost amount. Then times that by 150J (energy lost through the roof).
This is the second part to the exam Q
Q1aii) Insulating the loft would cut the heat lost through the roof by 50%. The loft insulation has a payback time of 1 1/2 years. How much did the loft insulation cost to buy?
METHOD) £95 is the 50% saved from £190.
You are saving money for 1.5years.
1.5 x £95= £142.50
So the loft insulation costed £142.50 to buy.
The two questions before this were questions to do with payback time. This next question shows you how to work out the actual payback time.
(this is in a bit of a weird order sorry I should have put the next question first then these two but oh well... it should still make sense :L)
Payback time Q
Q2) It costs £3000 to put double glazing into your home. This improvement saves £150 per year on fuel bills. What is the payback time?
------------ = 20years
This is the formula:
Cost of the improvement
PBT = ---------------------------------------