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Discounted Payback Period Calculator

Work out discounted payback period instantly with clear inputs, formula shown and shareable results.

About Discounted Payback Period Calculator

Discounted payback asks how long until cumulative discounted cash flows repay the investment. It is always longer than simple payback, and if it exceeds the project life the project never recovers its cost at that discount rate — a useful screen before a full NPV analysis.

Formulas

Discounted cash flow

DCF_t = Annual cash flow / (1 + r)^t

Discounted payback

The year in which cumulative DCF first equals the initial investment, interpolated within the year

Worked example

With the default values below, Discounted Payback Period Calculator returns Discounted payback period of 4.65. Change any input above and every figure here is recalculated in your browser.

Inputs used

Initial investment
250,000
Annual net cash inflow
70,000
Discount rate
10
Project lifemaximum 200 years
8 years

Results

Discounted payback period
4.65
Simple payback period
3.57
NPV over the project life
$123,444.83
Total discounted inflows
$373,444.83

Step by step

  1. 1Values used
  2. 2Discounted cash flow
  3. 3Discounted payback
  4. 4Discounted payback period= 4.65
  5. 5Simple payback period= 3.57
  6. 6NPV over the project life= 123,444.83
  7. 7Total discounted inflows= 373,444.83

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why prefer discounted payback to simple payback?

Because it respects the time value of money. Simple payback treats a cash flow in year eight as equal to one in year one.

Does payback replace NPV?

No. Payback ignores everything after the cut-off. Use it as a liquidity and risk screen alongside NPV, not instead of it.

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