A payback period calculator for even and uneven cash flows
This payback period calculator tells you how long an investment takes to earn back what it cost. Enter the amount you put in and the cash it brings back each year — the same every year or different each year — and it shows the simple payback period, the discounted payback period at your required return, and the NPV, IRR and profitability index side by side.
Students use it to check capital-budgeting homework; owners use it to compare a new machine, a solar system or a shop fit-out. A chart shows the cumulative cash flow crossing zero, the table shows every year, and you can download the table as a CSV file that opens in Excel. Everything runs in your browser.
How to use the Payback Period Calculator
- Choose a currency and enter the initial investment (year 0).
- Enter the discount rate — the return you require or your cost of capital.
- Pick Uneven and type one cash flow per line (or paste a column from a spreadsheet), or pick Even and enter one yearly amount, the number of years and an optional growth rate.
- Read the simple payback, the discounted payback, NPV, IRR and the year-by-year table.
- Copy the summary or download the CSV to keep working in Excel.
Payback Period Calculator features
Uneven cash flows
Any pattern of yearly cash flows, including negative years for repairs or refits.
Discounted payback
The same test on cash flows discounted at your rate, so time value is counted.
NPV, IRR and PI
Shown alongside, with a warning when cash flows change sign more than once and several IRRs exist.
Part-year answer
Interpolates inside the payback year and shows years and months.
Chart and CSV
Cumulative lines with the payback points marked, and a CSV with discount factors for Excel.
Payback period formula, with a worked example
With even cash flows, payback period = initial investment ÷ yearly cash flow: $50,000 returning $15,000 a year pays back in 3.33 years (3 years 4 months).
With uneven cash flows, add the cash flows year by year until the running total reaches the investment, then take the fraction of the next year: payback = years before recovery + amount still to recover ÷ cash flow in the recovery year. For $50,000 returning $12,000, $15,000, $18,000, $20,000 …, $45,000 is back after three years, $5,000 is still owed, and year 4 brings $20,000, so payback = 3 + 5,000 ÷ 20,000 = 3.25 years.
The discounted payback period does the same with each cash flow divided by (1 + rate)year. At 10%, year 4’s $20,000 is worth $13,660 today, and the investment is recovered after about 3.96 years. The result assumes each year’s cash arrives evenly through the year when it interpolates.
| Year | Cash flow | Cumulative | Discounted at 10% | Cumulative discounted |
|---|---|---|---|---|
| 0 | −50,000 | −50,000 | −50,000 | −50,000 |
| 1 | 12,000 | −38,000 | 10,909 | −39,091 |
| 2 | 15,000 | −23,000 | 12,397 | −26,694 |
| 3 | 18,000 | −5,000 | 13,524 | −13,171 |
| 4 | 20,000 | 15,000 | 13,660 | 490 |
Payback, NPV or IRR — which should you trust?
- Payback measures liquidity and risk: how soon your money is back. It ignores everything after the payback year, so a project with large late profits can look worse than it is.
- Simple payback also ignores the time value of money; the discounted version fixes that but still ignores later years.
- NPV counts every cash flow at your rate. A positive NPV means the project beats your required return — the main test in corporate finance.
- IRR is the rate at which NPV is zero. When cash flows change sign more than once there can be two IRRs, and this tool says so.
- For dated, irregular cash flows (exact days rather than years) use the XIRR calculator; for a single gain the ROI calculator; to find the sales needed to cover costs, the break-even calculator.
Payback period in Excel
Put the cash flows in a column with the investment as a negative number in year 0, add a running total with =SUM($B$2:B2), and find the first year where it turns positive. For the discounted version add a column =B3/(1+rate)^A3. Excel has NPV() and IRR() functions but no payback function, so the CSV from this tool includes the cumulative and discount-factor columns ready to use.
Payback Period Calculator FAQ
How do you calculate the payback period with uneven cash flows?
Add the yearly cash flows until the running total covers the investment. Payback = the number of full years before that point + the amount still to recover ÷ the cash flow of the year in which it is recovered.
What is a good payback period?
There is no single standard: companies set their own cut-off, often shorter for risky or fast-changing investments. Compare projects of similar risk, and check NPV as well.
What is the difference between simple and discounted payback?
Simple payback adds cash flows at face value. Discounted payback first divides each one by (1 + rate) raised to its year, so it is always longer when the rate is positive — or never, if the discounted cash flows fall short.
Why does the calculator say “Never”?
Because the cash flows you entered (or their discounted values) never add up to the investment within the years given. Add more years or check the amounts.
Can the payback period calculator handle a negative year?
Yes. Enter it with a minus sign. The payback point is the first time the running total turns positive.
Is this payback period calculator free?
Yes — free, no sign-up, and nothing you type leaves your browser.