Payback Period Calculator
Calculate the payback period for investments and business projects. Determine how long it takes to recover initial investment costs through cash flows or savings.
Step 1: Investment Details
Understanding Payback Period
The payback period is the time required to recover the initial investment. Shorter payback periods are generally preferred as they indicate faster return on investment and lower risk.
Step 2: Financial Parameters
About Discounted Payback Period
Discounted Payback Period (DPP) accounts for the time value of money by discounting future cash flows. It’s more accurate than simple payback period as it considers that money today is worth more than the same amount in the future.
Payback Period Results
Simple Payback Period
Investment Scenarios Comparison
| Scenario | Investment | Annual Cash Flow | Simple Payback | Discounted Payback | Risk Level |
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Year-by-Year Cash Flow Analysis
Payback Period Formula
Simple Payback Period = Initial Investment ÷ Annual Cash Flow
For uneven cash flows, calculate cumulative cash flow until it equals or exceeds the initial investment. Discounted Payback Period discounts future cash flows using the discount rate before calculating the payback period.
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