Payback Period & Discounted Payback Calculator

Before you model a full discounted cash flow, the simplest question is often the right one to ask first. How many years until this pays for itself?

Reading This Tool

How To Use This Calculator

Enter the upfront investment, the level annual cash flow it generates, and a discount rate.

Simple payback ignores the time value of money entirely, it just adds up raw cash flows. Discounted payback fixes that by discounting each year's cash flow first, which always takes at least as long, sometimes noticeably longer.

Your Inputs

Initial Investment $500,000

Annual Cash Flow Generated $120,000

Discount Rate 10.0%

Assumes a level, constant annual cash flow for simplicity. Real projects usually ramp up over the first year or two, use the NPV and IRR tool for an analysis that handles uneven cash flows properly.

Time To Break Even

Simple Payback Period

0.0 yrs

Discounted Payback Period

0.0 yrs

Cumulative Cash Recovered vs. Initial Investment

Simple Cumulative Cash Discounted Cumulative Cash

Payback period, discounted or not, ignores everything that happens after the payback point. A project with a fast payback but a short useful life afterward can still be a worse investment than one with a longer payback and years of cash flow beyond it.

Need the full return picture, not just the break-even point?

Run The Full NPV & IRR Analysis →