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Calculators / Finance / Simple payback period
Simple payback period calculator
Estimate recovery time for a project with constant annual cash inflows.
On this page
Simple payback period4years
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How to calculate
Estimate recovery time for a project with constant annual cash inflows.
Simple payback period = investment/cash
Worked example
Initial investment: 12000; Constant annual net cash inflow: 3000.
Simple payback period: 4 years.
Assumptions and limits
Not fully. It ignores cash flows after payback and the time value of money. Uneven cash flows require a period-by-period calculation.
Results are rounded for display; calculations use unrounded values. Read our calculation methodology.
Understanding the result
Payback estimates when constant net cash inflows recover the initial investment without discounting.
When this tool is useful
Estimate recovery time for a project with constant annual cash inflows.
Understanding your inputs
| Input | What to enter |
|---|---|
| Initial investment | Enter a number of at least 0 and no more than 1000000000000. |
| Constant annual net cash inflow | Enter a number of at least 0.01 and no more than 1000000000000. |
Frequently asked questions
Does payback measure profitability?
Not fully. It ignores cash flows after payback and the time value of money. Uneven cash flows require a period-by-period calculation.