Payback Period Calculator
Find out how long an investment takes to pay for itself. Enter the upfront cost and the expected yearly cash inflows — the calculator shows the payback period in years and months, helping you compare projects and judge risk before committing money.
How to use
- Fill in the fields above with your own figures — results update live as you type.
- Inflows are added year by year until they cover the investment. The part year is estimated by the fraction of that years inflow still needed.
- Check the result box and adjust any rate or parameter to test other cases.
Note: Payback ignores cash flows after recovery and the time value of money — use NPV alongside it for big decisions.
Tips
- A shorter payback period usually means lower risk — the money comes back sooner.
- Payback ignores everything earned after the cost is recovered; pair it with total profit for the full picture.
- Use the same time unit for all inflows (all yearly or all monthly) to keep the result correct.
- Compare two projects side by side by entering the same starting conditions for both.
Frequently Asked Questions (FAQ)
What does the payback period calculator show?
How many years and months an investment takes to recover its initial cost from yearly cash inflows.
What inputs does it need?
The initial investment amount and the expected cash inflow for each of the first five years.
What if the investment is not recovered within five years?
The calculator adds up the cash inflows for years 1 to 5. If the total is still below the initial investment, the project does not pay back within five years.
Does it account for inflation or interest?
No. This is the simple payback method: it only adds up yearly cash inflows against the initial cost, without discounting future money.