Compare simple and discounted recovery time for an investment with equal annual net cash inflows.
Printed from Calxy · https://www.calxy.net/financial/payback-period-calculator
0.01 – 10000000000
0.01 – 10000000000
0 – 100
Simple payback period
4.1667 years
Payback ignores cash flows after recovery. Discounted payback interpolates within a year rather than assuming continuous payments.
Simple payback = initial investment ÷ equal annual net cash inflow.
Discount each annual cash inflow, accumulating until it covers the investment.
Simple payback = initial investment ÷ annual net cash flow. For discounted payback, discount each year’s cash flow and accumulate it until the initial outlay is recovered, interpolating within the final year.
An initial $50,000 outlay followed by $10,000 annual net cash inflows has a five-year simple payback. At a 0% discount rate, discounted payback is also five years.
No. Payback ignores later cash flows, and simple payback ignores their timing. Compare overall return and risks as well as recovery time.
Last updated . Results are estimates for informational purposes only.