Free Payback Period Calculator
Find how long it takes for an investment to repay its initial cost from recurring cash flows. The simplest test for capital allocation decisions.
$50,000
$15,000
Payback period
3.33 years
Time to recover the initial outlay from cash flows.
Get the full Excel workbookIn months
40.0 months
Frequently asked questions
What is a good payback period?
Most companies prefer a payback under 3 years for operational projects and under 5 years for strategic investments.
What's the limitation?
Payback ignores the time value of money and cash flows after the payback date. Pair it with NPV and IRR for a fuller picture.