The demand for solar electric power systems, namely, photovoltaic system has grown steadily in our country over the last 10 years. However, the main obstacle against using photovoltaic system is the financial viability especially concerned with initial cost. The other factors affecting the economic viability of photovoltaic system are cost of electric energy, amount of electric energy produced by the photovoltaic system, discount rate, energy cost escalation rate, inflation rate, project life, and so on. Therefore, this thesis studies on the effect of various relating factors on economic evaluation of photovoltaic system in residential building by calculating payback period.