Calculate simple and discounted payback period for investments. Includes 5-year cash flow, 10-year NPV, and ROI analysis for capital budgeting decisions.
Expected net annual cash inflow from the investment
Optional: enter discount rate for discounted payback period (0 for undiscounted only)
Enter values above to see results
Simple Payback = Initial Investment ÷ Annual Cash InflowSimple PaybackInitial Investment ÷ Annual Cash InflowDiscounted PaybackYear when cumulative PV of cash flows equals initial investmentPVPresent Value = Cash Flow ÷ (1 + discount rate)^yearNPVNet Present Value = Σ PV of cash flows − Initial InvestmentThe simple payback period ignores the time value of money. The discounted payback period uses present values of future cash flows, accounting for the fact that money received sooner is worth more than money received later. NPV (Net Present Value) sums all discounted cash flows minus the initial investment — positive NPV means the investment creates value.
The payback period is the first question any prudent investor asks: when do I get my money back? This payback period calculator provides both simple and discounted payback periods, plus 5-year ROI and 10-year NPV, giving you a complete picture of investment recovery and value creation. Essential for business capital budgeting, equipment purchases, real estate, and any significant investment decision.
Enter your initial investment amount, expected annual net cash inflow, and optionally a discount rate for time-value-adjusted calculations. The calculator instantly shows simple payback period, discounted payback period (if a rate is provided), 5-year total cash inflow and ROI, and 10-year NPV.
A capital investment with steady annual cash inflows, no discounting.
The project pays for itself in about 4.2 years and returns 20% over 5 years.
Simple payback ignores the time value of money — add a discount rate to see the (longer) discounted payback and the NPV.
This calculator bridges the gap between simple payback analysis and more sophisticated NPV modeling. The discounted payback period and NPV outputs give you critical context that simple payback alone cannot provide — helping you make better-informed investment decisions and compare alternatives more accurately.
The biggest mistake is using payback period as the sole investment criterion. An investment with a 2-year payback that generates modest returns for only 3 years may be worse than one with a 3-year payback that generates strong returns for 15 years. Always complement payback analysis with NPV calculations. Also, ensure your annual cash inflow estimate is net of operating costs, taxes, and maintenance — not gross revenue.
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