Payback period calculator
Enter the amount you invest and the cash you expect to receive in each period. The calculator shows how many periods it takes to get your money back, both without discounting and with a discount rate, and lists the running total after every period. Periods can be years, quarters or months.
Runs in your browser: nothing you enter is sent anywhere.
How to use it
- Enter the initial investment as a positive number.
- List the cash flow of each period, separated by commas.
- Enter a discount rate for the discounted figure; 0 makes both the same.
- Read the payback periods and the running totals below them.
How it works
The running total starts at the negative investment. Each period adds its cash flow, or its present value CF ÷ (1 + r)^t for the discounted version. Payback is the number of full periods before the total turns positive plus missing amount ÷ that period’s cash flow.
Worked example
Invest 1,000 and receive 300, 400, 400 and 300. After period 2 the total is −300; period 3 brings 400, so payback is 2 + 300 ÷ 400 = 2.75 periods. At 8% the totals are −722.22, −379.29 and −61.75, and period 4 adds 220.51, so discounted payback is 3 + 61.75 ÷ 220.51 = 3.28 periods.
Tips
- Use consistent periods. The discount rate must be per period, such as monthly for monthly flows.
- Payback is a risk indicator, not a profit measure.
Frequently asked questions
What is the payback period?
It is the time needed for the cash an investment returns to equal the amount invested. With 1,000 invested and 300, 400, 400, 300 received in four periods, the running total is positive during period 3, so payback is 2.75 periods.
How is the fraction of a period worked out?
The last period is counted pro rata: full periods before it, plus the amount still missing divided by that period's cash flow. This assumes cash arrives evenly during the period.
What is the discounted payback period?
Each cash flow is first divided by (1 + rate)^t, so later money counts for less. It is always at least as long as the simple payback. At 8%, the example above takes 3.28 periods.
What are the limits of payback?
It ignores everything after payback and says nothing about total profit. Use it alongside net present value, for which the NPV and IRR calculator is available.
What if the investment is never repaid?
If the running total stays negative through your last period, the result says not repaid. Add more periods if you expect later cash flows.