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Payback Period
How long until an investment pays for itself
Formula: payback = investment / annual_cash_inflow, when annual_cash_inflow > 0
Payback = Investment ÷ Annual Cash Inflow. Simple time-to-recover. Ignores time value of money (use NPV/IRR for that), but useful as a quick liquidity check. Most capital projects target < 5 years.
Inputs
Results
Payback Period
4.17 year
Recommended next actions
- →Payback ignores time value of money — pair with NPV/IRR
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Formula
payback = investment / annual_cash_inflow, when annual_cash_inflow > 0Worked example
Inputs
investment50000
annual_cash_inflow12000
Outputs
payback4.17
Use for estimation. Verify safety-critical calculations with qualified review.