Payback Period
Payback Period - Calculate and analyze your financial metrics with this comprehensive calculator.
Payback Period Calculator
Calculate simple and discounted payback periods with comprehensive investment analysis
Project Details
Annual Cash Flows
Project Templates
Payback Period
Time required to recover initial investment from cash inflows
Useful for assessing liquidity and risk
Payback Period Reference
Simple Payback Period
= Initial Investment ÷ Average Annual Cash Flow
Ignores time value of money and cash flows after payback
Discounted Payback Period
Uses discounted cash flows to account for time value
More conservative and theoretically sound
Advantages
Easy to understand, assesses liquidity risk, useful for new businesses
Limitations
Ignores cash flows after payback, arbitrary cutoff period
When to Use
High-risk projects, liquidity constraints, early-stage ventures
Interpretation
Shorter payback = lower risk and faster cash recovery
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