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gh_userFlag for Australia

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Excel - Calculating Payback period

Im trying to use excel to assess a solar panel quote given to me.
They have given me the cost of the panel.  I can calculate the savings after 1 year based on the current tariff (electricity price per kwh usage).  The tariff is expected to increase per year (based on index)
A need a excel formula that can calculate the number of years until the total savings match the upfront cost of the panel.
Its based on cost = savings/year (based on current tariff) x (1 + %annual increase in tariff) to the power of number of years)
Currently the variables are:
C = Cost = $7000
S = Savings/year (based on current tariff) = $1100
I = Index based on %annual increase in tariff = 3%

But my formula No. of years = LOG(C/S,I) is getting strange answer of 63.

Any suggestions?
Microsoft Excel

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gh_user
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Saqib Husain
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Using your formula I get

1.684488685 using 3

and

-0.527754004 using 3%

Can you show me where you got this formula from?

You can see details of Discounted Payback Period at

http://accountingexplained.com/managerial/capital-budgeting/discounted-payback-period
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gh_user
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ASKER

Hi Saqib. I came up with the formula.  Might not be right.
ASKER CERTIFIED SOLUTION
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Alexandre Michel
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Hi GH

Have I answered your question?
If I have, please marked the question as "Answered". Thanks

Cheers

Alexandre
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gh_user
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ASKER

Thanks Alexandre.
Sorry..I missed seeing your answer.
It was great...well explained and tested!!
You are welcome!
If this answered your question, can close the question and rate the answer when you have 2 minutes
Thanks
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gh_user
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Hi Alexandre.  I cant seem to close question.  (I have been able to rate your answer as best solution).  I think the problem is due to question being abandoned due to my delay in responding.  I have put in request to get rectified.
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gh_user
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ASKER

WELL EXPLAINED
Microsoft Excel
Microsoft Excel

Microsoft Excel topics include formulas, formatting, VBA macros and user-defined functions, and everything else related to the spreadsheet user interface, including error messages.

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