Payback Period Calculator
Work out the simple or discounted payback period for an investment from its cash flows free in your browser with this payback period calculator.
Enter Values
Before you rely on this: First-pass guide only. Verify safety-critical or regulated work against the relevant standards, your project requirements and a qualified professional.
How to use this calculator
- Enter the investment and annual cash flow.
- Press Calculate.
How it works
Payback period = investment ÷ annual cash flow — how long to recover the cost.
Worked example
$10,000 at $2,500/year. = 4 years.
Common mistakes
- Ignoring the time value of money — simple payback treats year-1 and year-5 cash equally.
- Assuming even cash flows when they actually vary year to year.
Frequently asked questions
What is the payback period?
How long an investment takes to repay its initial cost from its cash inflows.
Is a shorter payback better?
Usually yes — it returns your money faster and lowers risk, though it ignores profits earned after payback.
Does payback period account for interest?
No — it ignores the time value of money. Pair it with ROI, or use a discounted payback method for a fuller picture.
Related tools
- ROI Calculator
- Straight-Line Depreciation Calculator
- Rule of 72 Calculator
- Break-Even Calculator
- CAGR Calculator
- Compound Interest Calculator
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Cite this tool
Zerdly. (2026). Payback Period Calculator. Retrieved from https://www.zerdly.com/tools/payback-period-calculator/
Tip: Enter any known values to calculate the remaining results.
All calculations run in your browser. Your inputs are never saved or transmitted.