1、Designation:E112107 1 Designation:E112112 Standard Practice for Measuring Payback for Investments in Buildings and Building Systems 1 This standard is issued under the xed designation E1121; the number immediately following the designation indicates the year of original adoption or, in the case of r
2、evision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A superscript epsilon () indicates an editorial change since the last revision or reapproval. 1 NOTESection 2.2 was editorially corrected in January 2009. 1. Scope 1.1 This practice provides a recommended
3、 procedure for calculating and applying the payback method in evaluating building designs and building systems. 2. Referenced Documents 2.1 ASTM Standards: 2 E631 Terminology of Building Constructions E833 Terminology of Building Economics E917 Practice for Measuring Life-Cycle Costs of Buildings an
4、d Building Systems E964 Practice for Measuring Benet-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems E1057 Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and Building Systems E1074 Practice for Measuring Ne
5、t Benets and Net Savings for Investments in Buildings and Building Systems E1185 Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems 2.2 Adjuncts: Discount FactorTables Adjunct to Practices E917, E964, E1057, E1074, and E1121 3 3. Terminology 3.1 Denitio
6、nsFordenitionsoftermsusedinthispractice,refertoTerminologiesFordenitionsofgeneraltermsrelated to building construction used in this practice, refer toTerminology E631and ; and for general terms related to building economics, refer to Terminology E833. 4. Summary of Practice 4.1 This practice is orga
7、nized as follows: 4.1.1 Section 2, Referenced DocumentsLists ASTM standards and adjuncts referenced in this practice. 4.1.2 Section 3, DenitionsAddresses denitions of terms used in this practice. 4.1.3 Section 4, Summary of PracticeOutlines the contents of the practice. 4.1.4 Section 5, Signicance a
8、nd UseExplains the signicance and use of this practice. 4.1.5 Section 6, ProceduresDescribes step-by-step the procedures for making economic evaluations of buildings. 4.1.6 Section 7, Objectives, Alternatives, and ConstraintsIdenties and gives examples of objectives, alternatives, and constraints fo
9、r a payback evaluation. 4.1.7 Section 8, Data and AssumptionsIdenties data needed and assumptions that may be required in a payback evaluation. 4.1.8 Section 9, Compute Payback PeriodPresents alternative approaches for nding the payback period. 4.1.9 Section 10, ApplicationsExplains the circumstance
10、s for which the payback method is appropriate. 4.1.10 Section 11, LimitationsDiscusses the limitations of the payback method. 1 This practice is under the jurisdiction of ASTM Committee E06 on Performance of Buildings and is the direct responsibility of Subcommittee E06.81 on Building Economics. Cur
11、rent edition approved April 1, 2007.2012. Published April 2007.2012. Originally approved in 1986. Last previous edition approved in 20022007 as E1121027 1 . DOI: 10.1520/E1121-07E01.10.1520/E1121-12. 2 ForreferencedASTMstandards,visittheASTMwebsite,www.astm.org,orcontactASTMCustomerServiceatservicea
12、stm.org.For Annual Book ofASTM Standards volume information, refer to the standards Document Summary page on the ASTM website. 3 Available from ASTM International Headquarters. Order Adjunct No. ADJE091703. 1 This document is not anASTM standard and is intended only to provide the user of anASTM sta
13、ndard an indication of what changes have been made to the previous version. Because it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version of the standard as published by
14、ASTM is to be considered the official document. Copyright ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.5. Signicance and Use 5.1 The payback method is part of a family of economic evaluation methods that provide measures of economic performa
15、nce of an investment. Included in this family of evaluation methods are life-cycle costing, benet-to-cost and savings-to-investment ratios, net benets, and internal rates of return. 5.2 Thepaybackmethodaccountsforallmonetaryvaluesassociatedwithaninvestmentuptothetimeatwhichcumulativenet benets, disc
16、ounted to present value, just pay off initial investment costs. 5.3 Use the method to nd if a project recovers its investment cost and other accrued costs within its service life or within a specied maximum acceptable payback period (MAPP) less than its service life. It is important to note that the
17、 decision to use the payback method should be made with care. (See Section 11 on Limitations.) 6. Procedures 6.1 The recommended steps for making an economic evaluation of buildings or building components are summarized as follows: 6.1.1 Identify objectives, alternatives, and constraints, 6.1.2 Sele
18、ct an economic evaluation method, 6.1.3 Compile data and establish assumptions, 6.1.4 Convert cash ows to a common time basis, and 6.1.5 Compute the economic measure and compare alternatives. 6.2 Only the step in 6.1.5, as applied to measuring payback, is examined in detail in this practice. For ela
19、boration on the steps in 6.1.1-6.1.4, consult Practices E964 and E917, and Guide E1185. 7. Objectives, Alternatives, and Constraints 7.1 Specify the kind of building decision to be made. Make explicit the objectives of the decision maker. And identify the alternative approaches for reaching the obje
20、ctives and any constraints to reaching the objectives. 7.2 An example of a building investment problem that might be evaluated with the payback method is the installation of storm windows. The objective is to see if the costs of the storm windows are recovered within the MAPP. The alternatives are (
21、1)todo nothing to the existing windows or (2) to install storm windows. One constraint might be limited available funds for purchasing thestormwindows.Ifthepaybackperiodcomputedfromexpectedenergysavingsandwindowinvestmentcostsisequaltoorless than the specied MAPP, the investment is considered accept
22、able using this method. 7.3 Whereas the payback method is appropriate for solving the problem cited in 7.2, for certain kinds of economic problems, such as determining the economically efficient level of insulation, Practices E917 and E1074 are the appropriate methods. 8. Data and Assumptions 8.1 Da
23、taneededtomakepaybackcalculationscanbecollectedfrompublishedandunpublishedsources,estimated,orassumed. 8.2 Both engineering data (for example, heating loads, equipment service life, and equipment efficiencies) and economic data (for example, tax rates, depreciation rates and periods, system costs, e
24、nergy costs, discount rate, project life, price escalation rates, and nancing costs) will be needed. 8.3 The economic measure of a projects worth varies considerably depending on the data and assumptions. Use sensitivity analysis to test the outcome for a range of the less certain values in order to
25、 identify the critical parameters. 9. Compute Payback Period 9.1 The payback method nds the length of time (usually specied in years) between the date of the initial project investment and the date when the present value of cumulative future earnings or savings, net of cumulative future costs, just
26、equals the initial investment.This is called the payback period.When a zero discount rate is used, this result is referred to as the “simple” payback (SPB). The payback period can be determined mathematically, from present-value tables, or graphically. 9.2 Mathematical Solution: 9.2.1 To determine t
27、he payback period, nd the minimum solution value of PB in Eq 1. ( t 51 PB B t 2 C t !/1 1i! t #5C o (1) E1121-12_1 11 1i!tE1121-12_2 where: B t = dollarvalueofbenets(includingearnings,costreductionsorsavings,andresalevalues,ifany,and adjusted for any tax effects) in period t for the building or syst
28、em being evaluated less the counterpart benets in period t for the mutually exclusive alternative against which it is being compared. E112112 2C t = dollar value of costs (excluding initial investment cost, but including operation, maintenance, and replacementcosts,adjustedforanytaxeffects)inperiodt
29、forthebuildingorsystembeingevaluated less the counterpart cost in period t for the mutually exclusive alternative against which it is being compared. B t C t = net cash ows in year t, C o = initial project investment costs, as of the base time, i = discount rate per time period t, and 1 1 1 i! t E11
30、21-07E01_2 E1121-12_2 = formula for determining the single present value factor, NOTE 1 Eq 1 and all others that follow assume the convention of discounting from the end of the year. Cash ows are assumed to be spread evenly over the last year of payback so that partial year answers can be interpolat
31、ed. 9.2.2 Uniform Net Cash Flows: 9.2.2.1 Forthecasewhere(B t C t )isthesamefromyeartoyear,denotedby(B C ),thepaybackperiod(PB)corresponding to any discount rate (i) other than zero can be found using Eq 2. E1121-12_3 where E1121-12_4 When the discount rate is equal to zero, E1121-12_5 However PB is
32、 undened when (SPB i)$1; that is, the project will never pay for itself at that discount rate. 9.2.2.2 A calculation using Eq 2 is presented for the following investment problem. What would be the payback period for a project investment of $12000, earning uniform annual net cash ows of $4500 for six
33、 years?A10% discount rate applies. First solve for the SPB: $12000/$4500=2.6667. Eq 2 would yield the following: E1121-12_6 9.2.2.3 Sincethepaybackperiod(3.25years)islessthanthesixyearsoverwhichtheprojectearnsconstantnetbenetreturns, and since a shorter MAPP has not been specied, the project is cons
34、idered acceptable. 9.2.3 Unequal Net Cash Flows: 9.2.3.1 Forproblemswithunequalannualnetcashows,acommonapproachtocalculatingthepaybackperiodistoaccumulate the present value of net cash ows year-by-year until the sum just equals or exceeds the original investment costs. The number of years required f
35、or the two to become equal is the payback period. 9.2.3.2 This approach is illustrated in Table 1. A project with seven years of unequal cash ows (Column 2) is evaluated at a discount rate of 12%. The net cash ow in each year is discounted at 12% to present value (Column 3). Each years addition to t
36、he present value is accumulated in Column 4. The present value of net benets (PVNB) in Column 6 is derived by subtracting the investment costs (Column 5) from the cumulative, discounted, future net cash ows (Column 4).The present value of net cash ows equals investment costs at some point in the fth
37、 year. The payback period can be interpolated as follows: E1121-12_7 9.2.3.3 Since the payback period is less than the period over which the project earns positive net benets (seven years), and since a shorter MAPP has not been specied, the project is considered acceptable. TABLE 1 Payback Problem W
38、ith Unequal Annual Cash Flows (1) (2) (3) (4) (5) (6) = (4) (5) Years (t, s) Net Cash Flows ($) (B t C t ) Discounted Net Cash Flows A ($) F B t 2 C t 1 1 i! tG Cumulative Discounted Net Cash Flows ($) ( i 5 1 s F B t 2 C t 1 1 i! tG Investment Cost ($) (C o ) Cumulative PVNB ($) ( t 5 1 s F B t 2 C
39、 t 1 1 i! tG C o 0 0 0 0 50 000 50 000 1 10 000 8 929 8 929 41 071 2 20 000 15 944 24 873 25 127 3 15 000 10 677 35 550 14 450 4 18 000 11 439 46 989 3 011 5 14 000 7 944 54 933 +4 933 6 12 000 6 080 61 013 +11 013 7 8 000 3 619 64 632 +14 632 A The discount rate = 12 %. E112112 39.2.4 Net Cash Flow
40、s Escalating at a Constant Rate: 9.2.4.1 To determine the payback period when net cash ows escalate at a constant rate, nd the minimum solution of PB in Eq 5. E1121-12_8 where: (B C )* = initial value of an annual, uniformly escalating, net cash ow, and e = constant price escalation rate per period
41、t applicable to net cash ows. 9.2.4.2 When e is not equal to i, the payback period can be calculated by using Eq 6. E1121-12_9 where SPB= C o /(B C )*. When e is equal to i, E1121-12_10 However PB is undened and the project will never pay for itself at discount rate i if E1121-12_11 9.2.4.3 If the p
42、ayback period is less than the period over which the project yields returns, the project is considered to be economically acceptable. 9.2.4.4 Eq 6 can be illustrated with the following problem. An energy conservation investment of $40000 yielding energy savings initially worth $8000 annually is to b
43、e evaluated with an 8% energy price escalation and a 12% discount rate.Applying Eq 6 yields the following: E1121-12_12 E1121-12_13 E1121-12_14 E1121-12_15 9.3 Estimating Payback Periods with Present-Value Tables: 9.3.1 Present-value tables, such as those found in Discount FactorTables, can be used i
44、n certain cases to estimate payback periods without a calculator. 9.3.2 Uniform Net Cash Flows: 9.3.2.1 Thepaybackperiodforaprojectwithuniformannualnetcashows(B C )canbeestimatedbyrstnding,inatable of Uniform Present Value (UPV) factors for the given discount rate, that UPV factor closest to the rat
45、io of E1121-12_16 The appropriate payback period is the number of periods (n) corresponding to that UPV factor. Interpolation can be used to more closely approximate the payback period. 9.3.2.2 As an example, when the discount rate is 12%, the payback period for an initial investment of $100 which r
46、eturns $15 per year is found as follows:The ratio of $100/$15=6.67.This ratio corresponds to a time period (n) of approximately 14.2 years in a table of Uniform Present Value factors based on a 12% discount rate. 9.3.3 Net Cash Flows Escalating at a Constant Rate: 9.3.3.1 Thepaybackperiodforaproject
47、withannualnetcashowsescalatingataconstantratecanbeestimatedbyrstnding, in a table of Modied Uniform Present Value (UPV*) factors for the given discount rate and escalation rates, that UPV* factor closest to the ratio of: E1121-12_17 Theappropriatepaybackperiodisthenumberofperiods(n)correspondingtoth
48、atUPV*factor.Interpolationcanbeused to more closely approximate the payback period. 9.3.3.2 Asanexample,whenthediscountrateis12%,thepaybackperiodforaninvestmentof$100thatreturnsnetcashows initially valued at $15 per year and increasing at 6% per year is found as follows: The ratio of $100/$15=6.67.
49、This ratio corresponds to a time period (n) of approximately 8.6 years in a table of Modied Uniform PresentValue factors based on a 12% discount rate and 6% escalation. 9.4 Graphical Solutions: 9.4.1 The payback period for projects with uniform annual net cash ows or ows that increase at a constant rate can be found using graphs. The payback graphs described below present discounted payback as a function of SPB. 9.4.2 Uniform Net Cash Flows: 9.4.2.1 Fig.1pl
