Years to recover an investment. The Payback Period Calculator takes initial investment, net cash flow per year and returns payback period plus in months, annual return on the investment. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Investment maths is about comparing money at different points in time on a fair basis. Compound rates, discounting and annualised returns let you compare options of different sizes and durations. Use the worked example below to check the maths against your own figures.
How the Payback Period Calculator works
The number of years until the investment has paid for itself. Simple payback ignores the time value of money and anything earned after the payback date, so use it as a first screen, not a final verdict.
Worked example
With the example values (initial investment of $100,000, net cash flow per year of $30,000), the payback period is 3.3 years; in months 3 years 4 months, annual return on the investment 30%. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is payback period calculated?
payback period = initial investment ÷ annual net cash flow.
Which figures do I need?
Initial investment, net cash flow per year. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Does the calculator account for taxes and fees?
Only where there is an input for them. For a true net return, add fees and taxes to your inputs or use the stock and crypto profit calculators, which include them.
