Simple payback
Simple payback accumulates undiscounted net cash flows and interpolates within the recovery year. It is intuitive, but ignores timing and every flow after break-even.
Capital-project recovery analysis
Measure simple and discounted payback without stopping at break-even.
Build fixed or irregular annual cash flows, include terminal value and compare payback with NPV, IRR, modified IRR and profitability index. Negative years are supported as additional project costs.
Decision guide
How to use payback in a capital decision
Payback is useful for liquidity and exposure, but it should sit beside a full-life valuation because a fast recovery can still lead to weak total economics.
Discounted payback
Discounting converts each future flow into present dollars before measuring recovery. A project can achieve nominal payback and never achieve discounted payback.
Value after recovery
NPV includes the entire modeled life. IRR expresses a break-even return, while modified IRR separates financing and reinvestment assumptions.
Forecast net cash flow
Use incremental after-tax operating cash flows, working-capital changes, maintenance and terminal proceeds—not accounting profit—when evaluating a real project.
Choose the discount rate
The required return should reflect opportunity cost and risk. A sensitivity range is usually more honest than a single precise forecast.
Compare equal lives
For mutually exclusive projects with different lives, equivalent annual value can support comparison, but replacement assumptions and capacity constraints still matter.
Simple by design
Three steps to a clearer number.
Enter your details
Use realistic values in each field. You can change them anytime.
Calculate instantly
The formula runs locally, so there is no account or waiting time.
Use the result
Treat the answer as a practical estimate for your next decision.