Amortization comparison calculation

The amortization comparison calculation is a static investment calculation, which is also referred to as the pay-back method, pay-off method or capital return method.
The profitability of an investment is measured by the payback period. This is the period within which the capital used for an investment property has flowed back into the company. It is also known as the recovery time.

With the help of the amortization comparison calculation, the following can be assessed:

• The advantages of a single investment object. It is given if it does not exceed the operationally defined maximum amortization period.

• The advantages of alternative investment objects, whereby the investment object is the more advantageous one that has the lower amortization period.

• The advantages of replacing an old investment with a new one.

The amortization comparison calculation is generally not suitable for assessing the profitability of investment properties. Only if the useful life of the investment object is less than the amortization time of the investment object, a lack of profitability of the investment object can be recognized.

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