Payback Period Calculator
Calculate how many periods it takes to recover your initial investment from a series of future cash flows.
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Your result
3.33 periods
Payback period
AI explanation
Formula
Number of periods (with linear interpolation within the final period) until cumulative cash flows recoup the initial investmentWorked example
₹5L investment, ₹1.5L/year for 5 years
| Field | Value |
|---|---|
| Initial investment | 500000 |
| Future cash flows | 150000, 150000, 150000, 150000, 150000 |
| Payback period | 3.33 |
| Recovered within the given cash flows? | true |
Assumptions
- Uses linear interpolation within the period in which recovery occurs, assuming cash flows within that period arrive evenly.
- Does not discount cash flows for time value of money — see the Net Present Value Calculator for a discounted version.
- Informational only.
Frequently asked questions
What is payback period used for?
It's a simple measure of investment risk — a shorter payback period means your capital is at risk for less time, which many investors and businesses view favorably alongside other metrics like NPV and IRR.
What's a limitation of payback period?
It ignores the time value of money and any cash flows after the payback point — two investments with the same payback period can have very different total returns.
What if my cash flows never recover the investment?
The calculator will indicate the investment isn't recovered within the cash flows you entered — extend the list if you expect further returns beyond what you initially entered.
Related calculators
Sources
- Mutual Fund Systematic Investment Plans — Securities and Exchange Board of India (SEBI). Effective 01-01-2020, reviewed 13-09-2026.
This calculator provides a general estimate only and does not constitute investment advice.
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