Payback Period Calculator
Initial Investment
Initial Investment Amount:
Cash Flows
Period
Cash Flow Amount
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Understanding Payback Period
The payback period is the time required to recover the cost of an investment. It is calculated by dividing the initial investment by the annual cash inflow.
Formula: Payback Period = Initial Investment / Annual Cash Inflow
For uneven cash flows, the calculation involves adding up each period’s cash flow until the cumulative amount equals or exceeds the initial investment.