Payback Period Calculator
The payback period is the time it takes for an investment to recover its initial cost from cash inflows. Enter the initial investment and the equal annual cash inflow; the calculator returns the number of years (including a fractional year if needed) until the cumulative inflows match the outlay. Simple payback does not discount cash flows.
Find payback period
How it works
Payback (years) = Initial investment ÷ Annual cash inflow. If the result is not a whole number, we report years and the fraction into the next year. Example: $50,000 investment, $12,000 per year → 50,000 / 12,000 ≈ 4.17 years. So payback is about 4 years and 2 months.
When to use it
Payback is a quick liquidity check: how fast do I get my money back? It ignores what happens after payback and does not use a discount rate. Use it alongside NPV or IRR for a fuller picture.
Frequently asked questions
- Does payback consider time value of money? No. Simple payback ignores discounting. For a time-adjusted measure use NPV or discounted payback.
- What if cash flows are unequal? This tool assumes equal annual flows. For uneven flows, add them year by year until the cumulative total equals the initial investment.