Formula: Payback Period = Initial Investment ÷ Annual Cash Inflow

This gives a simple, un-discounted estimate of how many years it takes for an investment’s cash inflows to equal its original cost. In the example above, a 50,000 investment returning 12,500 a year pays for itself in exactly 4 years.

This tool is provided for general informational purposes only and does not constitute financial advice. Verify results independently before making financial decisions.