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2. Total annual profit =

  • Total cost of unit x replacement number
  • Total annual profit / Average annual investment x 100
  • Net profit per unit x replacement number
  • Investment cost + total disposal value / 2

3. Payback period (PP) graph - Headings along horizontal axis

  • Year; Cash flow; Cumulative cash flow
  • Years: 0, 1, 2, 3, 4,

4. Cash flow (numbers vertically down)

  • Year 0 = Year 0 = total investment; then every year following = investment - annual profit
  • Year 0 = total investment; then every year following = Total annual profit
  • Every year = total investment;

5. Present Value (PV) =

  • Cash Flow x Discount Factor (DF)
  • Discount Factor (DF) x Cash Flow
  • Discount Factor (DF) - Cash Flow
  • Discount Factor (DF) / Cash Flow

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