Payback Period Calculator

Simple payback

The payback period is how long it takes for the cash an investment brings in to repay what it cost. With uneven cash flows, the tool adds them year by year and finds the point where the cumulative total turns positive, including the fraction of the final year. A solar system costing 1,500,000 that saves 300,000 a year pays back in 5 years.

Discounted payback

Money received later is worth less than money today. The discounted payback first divides each year's cash flow by (1 + rate)^year, so it is always longer than the simple payback — a fairer test when rates of return are high.

Limits

Payback ignores everything that happens after the payback date, so a project with large later returns can look worse than it is. Use it as a quick risk check alongside ROI, NPV and IRR, especially for projects like solar panels, machinery or shop renovations.