MihsabaHow to use
The payback period calculator estimates the first point when cumulative cash flows recover the initial investment. It reports simple payback and discounted payback. If recovery occurs within a period, the calculator assumes that period's cash flow accrues evenly to estimate the fractional period.
- Enter the positive initial investment.
- Enter net cash flow for each period in order; individual flows may be negative.
- Enter the discount rate per period and calculate simple and discounted payback.
How it is calculated
Example
Example: investment 100,000 with flows 25,000, 30,000, 35,000, 30,000, 25,000 recovers during period 4. After three periods 10,000 remains, so the simple payback is 3 + 10,000/30,000 ≈ 3.333 periods.
Important notes
Payback alone does not measure total profitability or cash flows after recovery. Use it alongside NPV, IRR and risk analysis. Results are informational and are not financial or investment advice.
Frequently asked questions
Simple versus discounted payback?
Simple payback adds nominal flows; discounted payback first divides period t's flow by (1+r)^t.
What if the investment is never recovered?
The tool reports no recovery within the entered horizon rather than inventing future cash flows.
Can cash flows be negative?
Yes. Later costs or losses can be represented as negative periodic flows.
Is this calculator free?
Yes. It is free to use and requires no account.