Payback Period Calculator

Calculate how long it takes to recover your investment.

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Payback Period

Enter the initial investment, annual cash flows, and discount rate.

Payback period
0 yrs
Discounted payback: 0 yrs
Payback period
0 yrs
Discounted payback
0 yrs
Total cash flows
$0
Net profit
$0
ROI
0%
NPV
$0

Worked example

With the default inputs shown below, this calculator returns the following results:

InputValue
Initial investment ($)$100,000
Annual cash flow ($)$25,000
Discount rate (%)10%
Project life (years)10
ResultValue
Payback period4.0 yrs
Discounted payback6.0 yrs
Total cash flows$250,000
Net profit+$150,000
ROI150.0%
NPV+$53,614

Values shown are produced by this page in your browser; change any input to update them.

How to use the Payback Period

  1. Initial investment ($) — default $100,000
  2. Annual cash flow ($) — default $25,000
  3. Discount rate (%) — default 10%
  4. Project life (years) — default 10
  5. Press Calculate to update the results instantly.

Frequently asked questions

The time it takes for cumulative cash flows to equal the initial investment. A $50,000 investment returning $12,000 a year pays back in about 4.2 years.
Because a dollar later is worth less. Discounting delays the payback date and gives a more honest picture for long projects.
It is safer, but not always more profitable. A project with a longer payback can earn far more over its full life, so check total value too.

Sources & references