Free calculator
Payback period calculator
Find how many periods it takes for cash inflows to recover an initial investment—simple payback (undiscounted) and, when you turn it on, discounted payback using a nominal annual discount rate converted to your annual or monthly step. Use equal inflows or switch to unequal rows for a short schedule. End-of-period inflows, spreadsheet-style—not an IRR solver, not a loan payoff tool, and not tax or investment advice.
When to use this calculator
Quick capital budgeting checks when you want time-to-break-even before opening a heavier model.
- Equipment or software purchase vs expected savings each month or year.
- Simple vs discounted payback side by side when someone supplies a hurdle rate for illustration.
- Homework or decks that ask for payback with a short non-level cash-flow list.
- Jump to the TVM or NPV workflow in a sheet when you need IRR or many dated flows—this page stays intentionally small.
Simple payback is the time when undiscounted inflows first cover the initial outlay, with a fractional last period when the crossing happens mid-period. Discounted payback uses the same timing but sums present values of each inflow at your nominal annual discount rate.
Simple (undiscounted) payback
We add end-of-period inflows until cumulative ≥ investment. If the boundary falls inside a period with positive inflow, we return fractional periods: previous full periods + (investment − prior cumulative) ÷ inflow in the crossing period.
Discounted payback
Each inflow is discounted to today as CFₜ ÷ (1 + i)^t where t counts periods and i is the effective rate per period (annual rate for annual steps; (1+r)^(1/12)−1 from nominal r for monthly steps). We solve the same fractional crossing on cumulative PV.
What we do not model
IRR/NPV on general schedules, taxes, inflation as a second knob, SaaS CAC payback rules, and loan amortization “payback” (use the amortization schedule tool for level loan payments).
Keep currency consistent and treat the discount rate as your illustration—not a market quote. For two-point return % and optional CAGR, open the ROI calculator. For PV / FV / PMT / rate / N on level annuities, open the TVM calculator. For loan balance schedules and PMT, open the amortization schedule calculator.
Google Sheets & Excel
English function names below. Build one column of inflows and a column of period indices; discount with /(1+$r)^n when $r is the period rate consistent with this page.
=B2/(1+$B$1)^A2Lock the rate cell with $ so you can fill down n. For monthly steps, store the monthly effective rate in B1 (for example =(1+0.1)^(1/12)-1 for 10% nominal annual).
=SUM($B$2:B2)Fill down to see when the cumulative line crosses the investment cell—compare to the calculator’s simple payback.
Frequently asked questions
What is the payback period?
Payback usually means the time until cash inflows add up to an initial investment. Simple payback adds nominal amounts; discounted payback waits until the present value of inflows reaches the outlay using a discount rate you choose.
What is the difference between simple and discounted payback?
Simple payback treats a dollar in any future period the same as a dollar today. Discounted payback counts future dollars smaller when they are farther away—so it is longer (or never) when the rate is high or inflows are small.
How do monthly vs annual inputs work?
Each row is one period at the frequency you pick. Annual means one inflow per year; monthly means one per month. The calculator converts a nominal annual discount to a monthly effective rate for discounted payback when you choose monthly.
Can I use this for loan payback or mortgage payoff time?
Not as the primary fit: this page is for project-style inflows you type. For fixed-rate loans with principal + interest payments, use the mortgage payment and amortization schedule calculators so PMT math matches your note.
Is this an IRR or NPV calculator?
No. IRR finds a rate that zeros NPV on a full cash-flow schedule. This page only answers when cumulative (discounted) inflows cross the initial outlay—use Sheets/Excel IRR/XIRR or the TVM tool for related building blocks.
Does this calculate SaaS CAC payback months?
Not automatically. Some teams define CAC payback with subscription margin and logo counts—assumptions vary. You can type the net inflows you already calculated per month into the unequal list, but this page does not pull CRM data or define CAC for you.
Is a 3-year payback good?
Textbooks and blogs sometimes cite rough ranges, but good depends on risk, cost of capital, and strategy. Treat any benchmark as conversation, not a verdict—this tool does not score investments.
How do I match this in Google Sheets or Excel?
Build columns for period index n, inflow, =inflow/(1+periodRate)^n for PV lines, and SUM for cumulative simple and PV. For equal inflows and zero discount, simple payback is =investment/inflow per period.
Is the discount rate the same as inflation?
Not necessarily. Inflation is one story about purchasing power; discount here is whatever nominal hurdle you type—often linked to cost of capital in teaching examples. For a dedicated inflation pass, see the inflation calculator.
Is this investment or corporate finance advice?
No. It is a free educational calculator—not a recommendation to buy or sell, not audit-grade NPV, and not a substitute for qualified advice when money is on the line.