Question 1

What is a break-even analysis?

Accepted Answer

Break-even analysis determines when the cumulative benefits of a decision equal its upfront cost. After break-even, every month produces a net gain.

Question 2

How do I use this for refinancing?

Accepted Answer

Enter your closing costs as the upfront cost and your monthly payment reduction as monthly savings. The result tells you how many months to recoup the costs.

Question 3

Does this work for solar panels?

Accepted Answer

Yes. Enter installation cost as upfront cost and average monthly electricity savings as monthly savings. Factor in any ongoing maintenance as a cost increase.

Question 4

What if my savings aren't constant?

Accepted Answer

This calculator assumes constant monthly savings. For variable savings, average them out over the analysis period for a rough estimate.

Question 5

Is a faster break-even always better?

Accepted Answer

Generally yes, but consider how long you plan to hold the asset. A 3-year break-even on a car you'll own for 5 years is fine; on one you'll trade in 2 years, it's a loss.

Question 6

What is the 5-year net savings?

Accepted Answer

This is the total savings you'd accumulate over 5 years minus the upfront cost — how much better off you'd be financially after 60 months.

Break-Even Calculator

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