Payback Time Calculator — Simple & Discounted Payback with Chart

Measure how long it takes to recover your initial investment. Compare simple vs discounted payback, switch between annual or monthly periods, and chart cumulative cash flow. All calculations run locally in your browser.

Inputs

Upfront cost (treated as an outflow at period 0).
Example: £2,500 each year (or month if Monthly is selected).
Used for constant mode, or to cap the table/chart with custom flows.
If Period = Monthly, converted via (1+r)1/12−1.

Results

Simple Payback
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Discounted Payback
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Final cumulative: — · Final discounted cumulative: —

Tip: Switch Annual/Monthly to see how the period changes payback and discounting.

Cash Flow Table

Period Cash Flow (£) Discounted Cash Flow (£) Cumulative (£) Cumulative Discounted (£)

What is Payback Time?

Payback time (or payback period) is the time it takes for the cumulative cash inflows from a project to equal the initial investment. This calculator shows both Simple Payback (no discounting) and Discounted Payback (accounts for the time value of money using a discount rate).

Simple Payback (constant inflow C): Payback = I / C. With varying cash flows, we sum period by period until cumulative ≥ I; if the crossover occurs within a period, we interpolate: t = t- + (remaining / flow).

Discounted Payback: find the smallest t such that Σ Ck / (1+r)k ≥ I, where r is the per-period discount rate (annual rate converted to monthly if the period is monthly). Fractional periods are interpolated the same way using discounted amounts.

Notes: If cumulative discounted inflows never reach the initial outlay within the chosen horizon, the discounted payback is “no payback” in that window. This can happen when the discount rate is high or cash flows are small/late.

Strengths, Limitations & Best Practice

  • Fast and intuitive: Helpful as a screening tool and for liquidity planning.
  • Discounted version: Penalises later cash flows via the time value of money.
  • Limitations: Ignores benefits after break-even; pair with NPV/IRR for value.
  • Monthly vs Annual: Use consistent rate conversion (1+r)1/12−1 when modelling monthly.

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