Payback Period Calculator
Work out how many months or years it takes to recover the cost of a business investment from its net cash inflows.
Your results
Calculation breakdown
- Payback period
- Investment cost ÷ Net cash inflow per year
Worked example
Equipment costing $50,000 that generates $15,000 in extra net cash inflow each year pays back in about 3.33 years.
Assumptions
- Net cash inflow should be the additional cash the investment generates each year.
- This is a simple payback method and ignores the time value of money.
- Consider payback period alongside ROI for a fuller investment picture.
How this calculator works
This calculator divides the upfront investment cost by the expected net cash inflow per period to show how long it takes to recover the initial outlay.
Frequently asked questions
What counts as net cash inflow?
The extra cash the investment generates each period, after any additional running costs it creates.
Is a shorter payback period always better?
Generally yes for risk management, though it doesn't account for total profitability over the investment's full life.
What if the investment never pays back?
If net cash inflow per period is zero or negative, the calculator will flag that payback cannot be reached.
Results are estimates only and are not financial, tax, legal or credit advice.