Discounted Payback Period Calculator

Years for discounted cash flows to recoup initial investment. Time-value-aware variant of payback.

Inputs

Result

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How to use this calculator

  • Enter initial investment, discount rate, and cash flows.
  • Read discounted payback in years.

About this calculator

Discounted payback first discounts each future cash flow back to present, then computes payback. Always longer than plain payback (because discounting shrinks future flows). Better than plain payback because it respects time value, but still ignores cash flows after the payback point.

Frequently asked

Why discount?+
Plain payback treats $1 in year 5 as worth $1 today — wrong. Discounting respects the time value of money.
Will it always pay back?+
Not necessarily. If r is high enough or flows small enough, the discounted cumulative may never reach the initial.
Discounted vs IRR?+
Discounted payback = "when do I recoup at my required return?". IRR = "what return do I get over the project life?". Different questions.
Always longer than plain payback?+
Yes — discounting shrinks future flows. The bigger the discount rate, the bigger the gap.
Use case?+
Combined with NPV: NPV says how much value, discounted payback says how soon. Both useful for capital-rationing decisions.

Related calculators

Payback Period Calculator
How many years until cumulative cash flows equal the initial investment.
NPV (Net Present Value) Calculator
NPV = sum of discounted future cash flows minus initial investment. Positive NPV = accept project.
IRR (Internal Rate of Return) Calculator
IRR = the discount rate that makes NPV = 0. Solved numerically via Newton's method.
MIRR (Modified IRR) Calculator
IRR with explicit reinvestment-rate assumption. Avoids the multiple-IRR problem.
Profitability Index Calculator
PI = (NPV + initial) / initial = PV of future flows / initial investment. >1 = accept.
Present Value Calculator
PV = FV / (1 + r)^n. The current worth of a future cash flow.

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