Payback Period Calculator – Constant Cash Flow
Estimate simple payback when equal annual net receipts accrue evenly through the year.
Formula
Payback years = initial investment / annual net cash inflow.
Payback in years ≈ (10,000)÷(2,500) · Equivalent months ≈ (4)×12
How to use
- Enter the initial investment.
- Enter a positive, constant annual net cash inflow.
- Read years and equivalent months to pay back.
Examples
- An investment of 15000 with 6000 annual net cash flow pays back in 2.5 years.
Frequently asked questions
Is this discounted payback?
No. It ignores the time value of money. Use NPV to examine discounted flows.
What does a fractional year mean?
It assumes receipts accrue evenly within the year; lump-sum year-end receipts have different timing.
Does fast payback prove a good investment?
No. Risk, later cash flows and financing costs still matter.
Sources
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