Payback Period Calculator
How long until an investment recoups its initial cost? Includes discounted payback (accounts for the time value of money).
Inputs
How it works
Simple payback = initial ÷ annual CF. Discounted payback discounts each year's CF by (1+d)^y and finds the year cumulative discounted CF equals the initial investment.
Frequently asked questions
What's a good payback period?
Depends on industry. Software: <2 years. Real estate: 5–10. Infrastructure: 15+. Compare to your alternative investments.
Simple vs. discounted payback?
Simple ignores the time value of money; discounted accounts for it. Discounted is more conservative and preferred by finance.
Should I use payback alone?
No — it ignores cash flows after payback. Always pair with NPV or IRR.
What if cash flows aren't equal?
This calc assumes constant annual CF. For lumpy flows, use the NPV/IRR calculator.
Does 'never pays back' mean bad?
It means the project loses money within your horizon at your discount rate. Extend horizon, raise CF, or lower the rate to reassess.