Payback Period Calculator
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Cash received at the end of each year
Result
Enter your values, then select Calculate.
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Reading a payback period
The payback period answers one question: how long until the project returns the cash you put in? A fixed inflow of $2,500 against a $10,000 outlay pays back in exactly 4 years. When inflows vary, the calculator accumulates them year by year and interpolates inside the recovery year — the table shows the running total so you can see how close each year gets.
Frequently Asked Questions
Why is a shorter payback better?
Money recovered sooner is exposed to less uncertainty and can be redeployed. Many businesses screen projects by requiring payback within a set number of years before deeper analysis.
What are the weaknesses of this method?
It discounts nothing (a dollar in year 5 counts the same as a dollar today) and ignores cash flows after break-even, so a project that pays back slowly but then keeps paying can look worse than it is.