The Payback Period Calculator can calculate payback periods, discounted payback periods, average returns, and schedules of investments.
• Simple Payback Period: Time required for nominal cumulative cash inflows to equal the initial capital outlay.
• Discounted Payback Period: Time required for discounted cash inflows (adjusted for the time value of money via discount rate) to recover the initial investment.
3.16 Years
3 Yrs 2 Mos3.92 Years
3 Yrs 11 Mos| Year | Cash Flow ($) | Cumulative Cash Flow ($) | Present Value (PV) ($) | Cumulative PV ($) |
|---|---|---|---|---|
| Year 1 | $30,000.00 | $30,000.00 | $27,272.73 | $27,272.73 |
| Year 2 | $31,500.00 | $61,500.00 | $26,033.06 | $53,305.79 |
| Year 3 | $33,075.00 | $94,575.00 | $24,849.74 | $78,155.52 |
| Year 4 | $34,728.75 | $129,303.75 | $23,720.20 | $101,875.73 |
| Year 5 | $36,465.19 | $165,768.94 | $22,642.01 | $124,517.74 |
The payback period is a fundamental capital budgeting metric that determines how long it will take for an investment to generate enough cash inflows to recover its original cost.
Simple payback calculates the raw nominal recovery timeline without adjusting for inflation or the opportunity cost of money. It is widely used by project managers to measure liquidity risk and investment speed.
Discounted payback discounts each future cash flow back to its Present Value (PV) using a chosen discount rate before measuring recovery. Because money in the future is worth less than money today, the discounted payback period is always longer than simple payback.
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