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What is most appropriate method to calculate payback period

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Question - What is the most appropriate method to calculate the payback period for replacement a plant for energy saving purpose?

1. The contract cost for replacement, annual energy and electricity used and cost per unit of electricity are known.

2. When the replacement cost is expensive already, the inclusion of innovative elements in the contract will be much more expensive and thus the payback period would be much more. It is difficult to persuade the end-user for upgrading the plant in terms of years to cover the money loss.

Reference no: EM133162726

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