Payback period calculation

I expected payback period is the year when cumulative after tax cash flow becomes positive. Instead, for the PVWAtts model, SAM does something different. Why?

SAM seems to take the entire project cost (ignoring the fact that I used 65% debt funding), and then on top of it adds principal and interest payments every year to arrive at a new cash flow specially for payback period calculaiton. As far as I can see, this cash flow is erroneous because it double counts the debt (the initial loan + principal and interest paymen over the project term). For instance Row 110 in the attached spreadsheet already includes principal and interest payments. Rows 111 and 113 once again add debt principal and interest payments. This cannot be right.

Am I missing something?

Hello,
Please see this discussion on the topic , and let me know if you still have any questions.
Best regards,

Paul.

Thanks Paul. That disucssion is quite helpful.

Regards,

Kishore

In the payback-residential-standard-loan.xlsx resource spreadsheet, a note states that "the total debt payment is a tax-deductible expense". The interest payment would be tax-deductible on a mortgage or HELOC, but what would allow the principal part of the payment to be tax-deductible?

Hi Tom,
The note in the spreadsheet is incorrect -- the debt interest payment, not the total debt payment, is tax deductible for commercial projects and when you choose the mortgage option on the Financial Parameters page for residential projects.
These spreadsheets are out of date now [May 2015], and will be updating them in the weeks to come to match the new version of SAM. As you note in this post , you can find the payback calculations for the current version of SAM by clicking Send to Excel with Equations on the Cash Flow page (Windows version only).
Best regards,

Paul.