Compare simple and discounted payback periods from fixed or irregular yearly cash flows, with net present value and an annual schedule.
Calculator
Enter net cash flows after operating costs. The discounted estimate assumes each annual flow arrives at year-end.
Payback and Cash-Flow Results
Compare simple recovery, discounted recovery, NPV, and annual cash-flow balances.
Investment and Cash-Flow Summary
Calculation Details
| Metric | Value | Method |
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Annual Cash-Flow Schedule
| Year | Cash flow | Present value | Simple balance | Discounted balance |
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How to use the payback period calculator
Enter an initial investment, choose a constant annual cash flow or enter separate cash flows by year, set a discount rate, and choose the analysis horizon. Cash flows may be negative in years with additional costs. The calculator reports simple payback, discounted payback, net present value (NPV), and the annual balances.
Simple and discounted payback formulas
Simple payback = first point cumulative cash flow equals initial investment.
Discounted cash flow in year t = cash flowt / (1 + discount rate)t.
NPV = -initial investment + sum of discounted cash flows.
For a constant positive cash flow, simple payback is initial investment divided by annual cash flow. For irregular flows, the calculator accumulates each year's inflow and outflow, interpolating within the recovery year. Discounted payback applies the selected annual rate before it accumulates flows.
Worked example
A $10,000 investment that returns $3,000 per year has a simple payback of about 3.33 years before discounting. Entering a positive discount rate generally lengthens the discounted payback because future dollars are assigned a lower present value.
How to interpret NPV and payback
A positive NPV means the modeled cash flows exceed the initial outlay after discounting at the entered rate and over the selected horizon. Payback ignores cash flows after recovery; discounted payback accounts for the time value of money but still does not measure risk, financing, taxes, or the full return on capital. Compare these results with other investment measures rather than using payback alone.
Frequently asked questions
What does no payback within the horizon mean?
The entered cash flows did not recover the initial investment within the selected analysis period.
Can cash flow vary each year?
Yes. Select the irregular model and enter annual net flows. Unused year fields are treated as zero.
When are cash flows assumed to occur?
Discounted annual flows are modeled at each year-end. The calculator does not model monthly timing, taxes, depreciation, inflation, or financing costs.