Uneven cash flows
10,000 invested, returning 3,000, 4,000 and 5,000: 7,000 is recovered after 2 years, and the last 3,000 takes 0.6 of year 3 — a payback of 2.6 years.
Payback Period Calculator
Find how long an investment takes to pay for itself, with an optional discounted payback period.
Result
Enter your values and select Calculate to see the result.
Runs in your browser — nothing you enter is sent to a server.
How the Payback Period Calculator works
Enter the initial investment and the cash it brings in each year — one number if it's the same every year. The payback period is when the cumulative cash flow turns positive, interpolated within that year. Add a discount rate to get the discounted payback period, which accounts for money later being worth less than money now.
Formulas
Payback period
years before recovery + (amount still to recover ÷ cash flow in the payback year)
Discounted cash flow
cash flow ÷ (1 + r)year
Examples
Discounting
10,000 returning 4,000 a year pays back in 2.5 years, or about 3.02 years discounted at 10%.
Frequently asked questions
Is a shorter payback always better?
It means less risk, but payback ignores cash after the payback point. Compare projects with ROI or net present value too.
What discount rate should I use?
Your cost of capital or the return you could earn elsewhere at similar risk.
What if it never pays back?
The calculator says so; add more years of cash flow if you expect them.
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