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.

Payback Period Calculator

Estimate how long it takes for an investment to recover its upfront cost. Enter the initial amount and equal annual cash inflow to get the payback period.

Find payback period

Initial investment

Annual cash inflow (equal each year)

Enter investment and cash flow to get payback.

How it works

What this result means

The payback period is how long it takes to recover your initial investment from net cash inflows. It does not account for the time value of money — a shorter payback is better only when comparing investments with similar risk.

Formula:

Payback = Initial investment ÷ Annual net cash inflow

Where:
Initial investment = upfront cost
Annual net cash inflow = average yearly cash return
Result is in years

Enter the total upfront investment
Enter the expected annual net cash inflow
Divide investment by inflow
Result is the number of years to recover the investment

Example

$50,000 investment, $12,500/year inflow: Payback = 50,000 ÷ 12,500 = 4 years.

Use this tool for

Checking how quickly an investment may repay itself
Comparing simple projects with similar risk
Adding a quick liquidity view before deeper analysis

Common 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.