Payback Period Calculator
Enter your initial investment and expected annual cash flow to calculate the payback period.
Payback Period Calculator
Calculate how long it takes for an investment to pay for itself from its annual cash flow.
The payback period is a simple way to evaluate an investment: how long until the cash it generates equals what was originally spent. It is calculated by dividing the initial investment by the expected annual cash flow, assuming that cash flow stays consistent.
Example
- With the default values shown above, this calculator returns: Payback Period ≈ 4.00.
Frequently Asked Questions
What is a good payback period?
It varies by industry and investment type — shorter payback periods are generally considered lower risk, but the right threshold depends on your business, financing costs and the investment’s expected lifespan.
Does this account for the time value of money?
No — this is a simple payback period. A discounted payback period calculation would apply a discount rate to future cash flows, generally resulting in a longer payback period.