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Financial calculators and cash flows · Payback
Payback. Uses undiscounted cash flows at equal intervals. A fractional recovery period is a linear estimate.
Payback
Mathematical examples based on your inputs; taxes, fees and market forecasts are not included.
Results are for study and planning. Check decisions about real money with a qualified professional.
Your calculation
- Payback
- 2.5
How the calculation works
Uses undiscounted cash flows at equal intervals. A fractional recovery period is a linear estimate.
A worked example
- Cash flow
- -1,000 · 400 · 400 · 400
- Discount rate per period (%)
- 0
Step by step
- Period 0: -1,000
- Period 1: -1,000 + 400 = -600
- Period 2: -600 + 400 = -200
- Period 3: -200 + 400 = 200
- Payback = 2 + 200 ÷ 400 = 2.5
Flows must be equally spaced and start with a negative investment. With a discount rate above 0, every flow is discounted first, so payback takes longer.
If one input changes
- Discount rate per period (%) = 5: Payback = 2.74
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