Final answer:
The payback period formula is "Initial investment / increased cash flow per period." It calculates the time required for an investment's savings to recoup its initial cost.
Step-by-step explanation:
The formula for the payback period is 'Initial investment / increased cash flow per period'. This formula is used to determine how long it will take for the savings from an investment to cover the initial cost of that investment.
When it comes to adding extra insulation, as mentioned in the problem, we would calculate the simple payback time by dividing the insulation cost per square meter by the energy cost savings per million joules, adjusting for the average temperature difference (ΔT) over the heating season.