Free calculator
Payback period calculator
How long until an investment pays for itself? Enter the cost and the cash it brings in each period, even or uneven. You get simple and discounted payback, the cumulative schedule, and NPV and IRR from the same figures.
Project
Your required return or cost of capital, for one period.
Enter it as a positive number; it's treated as cash out.
Use a minus sign for a cash outflow, such as a later reinvestment.
MIRR rates (optional)
Blank uses the discount rate.
Blank uses the discount rate.
Discounted cash flows
| Year | Cash flow | Present value | Cumulative PV |
|---|---|---|---|
| 0 | (100,000.00) | (100,000.00) | |
| 1 | 25,000.00 | (77,272.73) | |
| 2 | 30,000.00 | (52,479.34) | |
| 3 | 35,000.00 | (26,183.32) | |
| 4 | 30,000.00 | (5,692.92) | |
| 5 | 25,000.00 | 9,830.12 | |
| Net present value | 9,830.12 | ||
Check it in Excel or Google Sheets
With the initial investment in B2 as a negative number and the cash flows in B3:B7:
=NPV(10%, B3:B7) + B2- $9,830.12
=IRR(B2:B7)- 13.75%
Leave B2 out of the NPV range. Excel’s NPV function discounts the first value it’s given by one full period, so including today’s investment understates the result.
The payback period formula
When the cash flows are the same in each period, payback is a single division:
A $100,000 machine that saves $25,000 a year pays back in 4 years. When the cash flows differ, find the last period before cumulative cash flow turns positive, then add the fraction of the next period needed to close the gap:
The calculator’s starting example costs $100,000 and returns $25,000, $30,000, $35,000, $30,000 and $25,000. After 3 years, $90,000 has come back and $10,000 is still out. Year 4 brings $30,000, so payback is 3 + $10,000 ÷ $30,000 = 3.33 years.
Discounted payback
Simple payback treats a dollar in year five like a dollar today. Discounted payback doesn’t: it discounts each cash flow at your required return before adding them up. At 10%, the same project pays back in 4.37 years instead of 3.33. If discounted payback never arrives within the project’s life, the NPV at that rate is negative.
Payback in Excel
Excel has no payback function. Put the cash flows in a column with the investment as a negative first value, add a running total beside them, and find the first period where the total reaches zero. The calculator’s schedule has the same columns, cumulative cash flow and cumulative present value, and copies straight into a spreadsheet.
How to use payback well
- As a screen, not a verdict. Payback answers “how long is our money at risk?” It says nothing about the cash after the cutoff.
- With a stated cutoff. Decide the longest payback you’ll accept before you run the numbers.
- Next to NPV or IRR. The calculator reports all three from the same inputs. The IRR calculator and NPV calculator lead with those results.
Payback period: questions
- What is a good payback period?
- The one your business sets as its cutoff. Payback has no built-in benchmark: a company short of cash may want its money back within two or three years, while a utility building a plant may accept a decade. Compare the result with your own cutoff and, because payback ignores profit after the cutoff, with NPV.
- How do you calculate payback with uneven cash flows?
- Add up the cash flows period by period until the total covers the investment. Payback is the number of full periods before that, plus the share of the next period needed to finish the job. In the example on this page, 3 years recover $90,000, and the remaining $10,000 is 33% of year 4's $30,000, so payback is 3.33 years.
- What is the discounted payback period?
- The same calculation run on present values: each period's cash flow is discounted at your rate before it is added up. It is always at least as long as simple payback, because later dollars count for less. The calculator shows both.
- What's the difference between payback period and break-even?
- Payback measures time: how long until an investment's cash flows have repaid it. Break-even measures volume: how many units, or how much revenue, covers fixed costs in a period. A project can break even month after month and still take years to pay back what was spent to start it.
- Why isn't payback enough on its own?
- It ignores the time value of money (unless discounted), and it ignores the cash that arrives after the cutoff. Two projects with the same payback can differ greatly in value if one keeps producing cash and the other stops. Use it as a liquidity and risk screen alongside NPV or IRR.
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Sources
Official documents read on November 5, 2026. Vendor facts are sourced on each listing.