Find out how long it takes for an investment to pay for itself, both in simple terms and after discounting future cash flows back to today's dollars.
Computes the payback period for an investment with a recurring cash flow that may grow or shrink by a fixed rate each year.
Computes the payback period from an initial investment and a series of different annual cash flows.
Payback period answers a simple, practical question: how long until an investment returns the money that was put into it? It's a liquidity and risk measure more than a profitability measure — a shorter payback period means capital is tied up for less time and exposed to fewer things that could go wrong along the way.
The plain payback period treats a dollar received in year 5 the same as a dollar received today, which overstates how quickly an investment really pays off. Discounted payback period fixes this by shrinking each future cash flow back to its present value before adding it up — so it always takes at least as long (usually longer) than the simple payback period.
It's the internal rate of return (IRR) of the initial investment against the full series of cash flows entered — a measure of the annualized return the investment actually earns, independent of the payback period figures.
If cumulative cash flow never turns positive within the years provided, the calculator reports "Never" for that payback figure instead of a misleading number.
Pick another financial tool to jump straight to it.
Solve for the internal rate of return on a series of cash flows.
LiveCalculate the simple return on investment for a purchase or project.
Find the present value of a future sum or cash flow stream.