Payback Period Calculator
Calculate how long it takes to recover your initial investment
Investment Details
Equal annual cash inflows
Timeline
Payback Period Guide
• 0-2 years: Excellent payback
• 2-5 years: Good payback
• 5-7 years: Acceptable for some projects
• 7+ years: Long payback, higher risk
About Payback Period
Payback Period measures how long it takes to recover an initial investment from cash inflows. It's a simple metric for assessing investment risk and liquidity.
How to use: Enter your initial investment and expected annual cash flows (either equal or uneven). The calculator determines when cumulative cash flows equal your initial investment.
Decision rule: Shorter payback periods indicate lower risk. Compare to your target payback period. Note: This metric ignores cash flows after payback and doesn't account for time value of money. Use alongside NPV and IRR.