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Payback Period Calculator

Estimate simple or discounted payback from entered periodic cash flows or an annual return stream with assumed growth.

Currency: USD

Enter all amounts in USD. Changing currency keeps numbers unchanged; no exchange rate is applied.

Your inputs

First cash flow occurs at time zero; subsequent flows are one period apart.

Calculations run in your browser. No account needed.

EXAMPLE RESULTCalculated locally
Simple payback
2.6
Discounted payback
2.81
Clear inputs. Transparent methods.
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Calculate with your inputs to save a result or compare scenarios.

How it works

A useful distinction

Payback can later reverse

Cash flows of −1,000, 600, 600 and −1,000 first recover the investment after about 1.67 periods, yet finish 800 below zero overall. Inspect later outflows; crossing the payback threshold once does not guarantee lasting recovery.

What a payback period does and does not show

The payback period identifies when accumulated modeled inflows recover the initial outlay. Check whether the selected result uses discounted cash flows before comparing it with another payback estimate. Cash received after the recovery point still matters to total project value. A short payback therefore describes recovery speed, rather than proving that a project has the highest overall return.

Payback period: formula and assumptions

Payback is the first period at which cumulative cash flows recover the initial outlay.

Fractional periods assume the recovery-period cash flow arrives uniformly within that period.

Growing annual cash flows: formula and assumptions

Year y return = first return × (1+growth)^(y−1).

Compare simple and discounted cumulative recovery. Fractional years interpolate cash within the recovery year; actual year-end receipt dates can differ.

Worked example

Using the Payback period example:

Inputs
Cash flows
-10000, 3000, 4000, 5000
Discount rate (%)
5
Method

Payback is the first period at which cumulative cash flows recover the initial outlay.

Result

Example result

Simple payback: 2.6

Discounted payback: 2.81

These are illustrative inputs. Change the values to explore a different scenario.

Formula references

References explain the underlying methods; they do not imply endorsement or individual professional review of Finflo.

Common questions

How is a fractional payback period calculated?

The model interpolates cash within the recovery period. Actual receipts arriving only at period end can produce a different practical recovery date.

Does the shortest payback always identify the best investment?

No. Payback alone does not value all later cash flows or fully describe risk. Discounted payback also depends on the chosen discount rate.

Prepared by Finflo. See our methodology and editorial policy. Read the relevant professional-advice limitations.