Payback period calculator
Enter the starting investment and each year’s cash coming in. See when it has been paid back, plainly and then with a discount rate.
Result
2.75Simple payback period (years)
- Discounted payback period (years)
- 3.02
- Net present value
- 2,408.72
- Total cash in
- 14,000.00
Inputs
- Starting investment
- 10000
- Cash in, one per year
- 3000; 4000; 4000; 3000
- Discount rate (optional)
- 5
How it is calculated
Cash coming in is added up year after year until it covers the investment.
Result
Simple payback period (years)
- Discounted payback period (years)
- 3.02
- Net present value
- 2,408.72
- Total cash in
- 14,000.00
How it is calculated
- Cash coming in is added up year after year until it covers the investment.
- In the year the line is crossed, cash is assumed to come in evenly: fraction of year = amount left ÷ that year’s cash.
- Discounted version: the cash of year k is divided by (1 + rate)^k.
- NPV = sum of discounted cash − investment.
Example
Investing 10,000 then receiving 3,000, 4,000, 4,000 and 3,000: paid back in 2.75 years, or 3.02 years at a 5% discount rate, with an NPV of 2,408.72 on 14,000.00 of cash in.
Good to know
- Yearly cash, spread evenly within the year.
- Ignores what happens after payback: pair it with the NPV or IRR.
Frequently asked questions
What is this tool used for?
Enter the starting investment and each year’s cash coming in. See when it has been paid back, plainly and then with a discount rate.
How is the result calculated?
Cash coming in is added up year after year until it covers the investment.
What should I check before using the result?
Yearly cash, spread evenly within the year.