Payback Period Calculator

Calculate the exact number of years required to recover initial capital investments from annual project cash flows.

Calculator Inputs

$
Initial investment expenditure.
$
Consistent annual cash return.
%
Discount rate.

Calculated Results

Payback Period
3.33 Years (3 Years, 4 Months)
Discounted Payback Period (at 8%) 4.15 Years
Total Inflows Over Horizon $75,000.00
Net Capital Gain +$25,000.00
Values calculate live as you adjust inputs.

About Payback Period Calculator

Corporate finance capital budgeting tool that determines how long capital remains at risk before breakeven recovery.

What is Payback Period Calculator?

Corporate finance capital budgeting tool that determines how long capital remains at risk before breakeven recovery.

How to Use This Calculator

  1. Enter initial investment outlay.
  2. Enter expected annual recurring cash flow.
  3. Enter discount rate.
  4. View simple and discounted payback periods.

The Mathematical Formula & Variables

Payback Period = Initial Investment / Annual Cash Inflow

Step-by-Step Worked Example

Scenario: $50,000 project returning $15,000 per year.

  1. $50,000 / $15,000 = 3.333 years.
  2. 0.333 years * 12 months = 4 months.

Result: 3 Years, 4 Months

Frequently Asked Questions

What is the limitation of the simple payback period?

It ignores the Time Value of Money and completely ignores cash flows generated after the payback cutoff point.