Rytvae Consulting · Think Right · Invest Right
Payback Period Calculator
Result
Chart
Show formula & working
Payback = years before recovery + (amount still to recover ÷ cash inflow in the recovery year)
Discounted payback: the same with each inflow ÷ (1 + r)t
Details
How this works
Payback is the time it takes for a project's cash inflows to add up to the initial investment. It is simple and shows how long money is at risk.
Discounted payback divides each year's inflow by the cost of money first, so it is always longer — and may never arrive if the project does not earn its cost of capital.
Frequently asked questions
Is a shorter payback always better?
Not necessarily. Payback ignores everything after the recovery point; a project with a longer payback can still create more value. Look at NPV and IRR too.
What discount rate should I use?
Your cost of capital — the blended cost of the loan and the return the promoters expect on their equity.
Preparing a project report?
Cost of project, means of finance and repayment capacity are what lenders read first. Talk to Rytvae.