This worksheet from Oakpoint Credit in Marion, Ohio calculates the payback period of a machine from its installed cost and the monthly cash it adds or saves, including uneven monthly cash flows, then sets the result against a financing payment. It is arithmetic only on the numbers you supply, not an offer.
Payback Period Calculator Months: The Basic Formula
Payback period in months equals the installed cost of the machine divided by the net cash it adds each month. Installed cost includes the price, freight, rigging, installation, tooling and training. Net monthly cash is the extra margin from new work, plus costs saved, such as outsourcing or overtime, minus the machine's own running costs: power, maintenance, consumables and any added labor.
| Line | Amount |
|---|---|
| Installed cost of a used CNC lathe | $96,000 |
| Outsourced machining no longer bought, per month | $4,100 |
| Running costs of the lathe, per month | $900 |
| Net monthly cash | $3,200 |
| Payback period | 30 months |
Illustration only, invented figures: a Marion, OH job shop pays $96,000 for a used CNC lathe installed. It stops buying $4,100 a month of outsourced machining and spends $900 a month to run the lathe, a net $3,200 a month, so the payback period is 30 months (our arithmetic: $96,000 / $3,200).
Payback Period Calculator for Uneven Cash Flows in Marion County, OH
A machine may not earn the same amount every month. A new lift or press brake ramps up as the shop learns it and wins work for it. For uneven flows, add up the monthly cash month by month until the running total reaches the installed cost.
| Months | Cash in those months | Running total |
|---|---|---|
| 1-3 | $6,500 | $6,500 |
| 4-6 | $10,200 | $16,700 |
| 7-9 | $10,800 | $27,500 |
| 10-12 | $11,400 | $38,900 |
Illustration only, invented figures: the same $96,000 lathe earns $1,500 in month one, rising to $3,800 a month by month ten. After twelve months the invented running total is $38,900, leaving $57,100 (our arithmetic). At $3,800 a month from then on, that takes about 15.0 more months, a payback of about 27.0 months (our arithmetic), against 30 months with even flows.
Payback Period Calculator Irregular Cash Flows Near Marion, OH: When Months Go Negative
Some months can be negative: a slow month, a repair, a training week when the machine earns nothing. Keep those months in the running total rather than skipping them; a negative month pushes payback out. If several months in a row are negative, the machine may not be earning what the plan assumed, and the estimate should be redone with real figures.
Payback Period Calculator Online vs a Paper Worksheet for Marion, OH Shops
An online calculator does the same division; the hard part is the inputs. A paper or spreadsheet worksheet keeps the assumptions visible: where the monthly savings come from, which costs were counted, and what happens if the work comes in slower. A funding partner reading a request will ask those same questions.
- List every installed cost from the vendor quote.
- Estimate monthly new margin and savings from your own records.
- Subtract monthly running costs.
- Divide, or build the running total for uneven months.
- Compare the result with the machine's expected working life.
Setting Payback Against a Financing Payment
Payback tells you whether the machine earns its cost; the financing payment tells you whether cash flow can carry it meanwhile. Illustration only, invented figures: the $96,000 lathe is financed with $9,600 down and $86,400 over 60 months at an invented 9% annual rate, a payment of about $1,794 a month (our arithmetic). With $3,200 of net monthly cash in this invented case, the machine covers its payment with about $1,406 a month to spare.
If the payment were larger than the monthly gain, the shop would be paying part of the machine from other income until the loan ended. That can still make sense for a machine with a long working life, but it should be a decision, not a surprise. Loans and leases for machines are compared on the Marion, OH equipment financing page.
Where the Payback Worksheet Stops
Payback ignores what happens after the machine has paid for itself and does not discount future cash. For a large purchase, an accountant may add a discounted payback or a net present value figure. The worksheet is a first screen, and the figures are yours, not an offer or a quote.
Manufacturing paid $385.4 million in wages across Marion County, OH in 2023 (County Business Patterns), and machines are what those payrolls run on. Manufacturing equipment financing and auto repair shop loans cover the two trades this worksheet was written for.
By Oakpoint Credit · Updated