Payback Period Calculator

Find how long an investment takes to pay for itself, with discounted payback, NPV and IRR.

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Money going out today, as a positive number.
Your required return or cost of capital.
Cash Flows (End of Each Year)
Leave later years blank. Use a minus sign for years with net outflows.
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Fractions and decimals both work.
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Years to Pay Back
NPV
IRR
Profitability index
Payback period
Discounted payback
Total cash returned
Decision at Your Rate

Projects

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How to Calculate the Payback Period

The payback period is how many years of cash flow it takes to earn back the initial investment. Within the year it turns positive, the page assumes cash arrives evenly and interpolates. The discounted payback does the same with each year’s cash flow discounted at your rate, so it is always longer.

NPV = −investment + Σ CFₜ ÷ (1 + r)t
IRR = the rate r that makes NPV = 0
Payback = years until cumulative cash flow turns positive (discounted payback uses discounted flows)

Worked Example

Tips

NPV is the most reliable test when comparing projects; IRR can be misleading when cash flows change sign more than once or projects differ in size. Payback ignores everything after the investment is recovered, so use it as a risk check rather than the decision rule. These match Excel's NPV (applied to years 1 onward, minus the investment) and IRR functions.