Payback Period Calculator

Numbers stay in your browser. The default even example is a cost of 10,000 recovered at 2,500 a year, which is 4 years. This is simple payback, not a discounted rate of return.

Quick answer: with cost in B2 and a constant annual inflow in C2:

=B2/C2

For uneven years, put each inflow in a column, compute a running total, and add the fraction of the year that finishes the recovery.

Even 2,500 a year, and an uneven 3.5-year case

10,000 ÷ 2,500 = 4 years. In Google Sheets on 12 November 2026, =10000/2500 returned 4.

Uneven inflows of 4,000, 3,000, 2,000, and 2,000: the running totals are 4,000, 7,000, and 9,000 after three years, leaving 1000 of the 10,000 unrecovered. Year 4’s 2,000 covers that remainder halfway through the year, so the payback is 3.5 years. The same cumulative additions in the test workbook returned 4000, 7000, 9000, and a remainder of 1000.

If the listed flows never reach the cost, there is no finite payback; the calculator will say so rather than invent a year. A zero or negative annual inflow cannot be used as a divisor in the even case.

What simple payback ignores

Cash after the payback date does not change the answer, and later cash is not discounted. A project that returns 2,500 a year for four years and then nothing has the same 4-year payback as one that keeps returning 2,500 for a decade. For a return rate, use the ROI calculator (single period) or the CAGR calculator (annualized). This page also assumes the cost is paid at the start and the inflows arrive at the end of each year; a mid-year convention would change the fraction slightly.

Questions that come up

What is the payback period formula in Excel or Google Sheets?

For even annual cash flows, years = cost / annual inflow. With cost in B2 and the annual amount in C2, that is =B2/C2. 10,000 recovered at 2,500 a year is 4 years. For uneven years, build a cumulative column and interpolate in the year the total crosses the cost.

How do I handle uneven cash flows?

List each year’s inflow, compute a running total, and find the first year the running total is at least the cost. If 4,000, 3,000, and 2,000 leave you 1,000 short of 10,000 after year 3, and year 4 is 2,000, the fraction is 1,000/2,000 and the payback is 3.5 years.

Does payback consider the time value of money?

Simple payback does not. A dollar in year 4 counts the same as a dollar in year 1. For a discounted payback or a rate of return, use a present-value schedule or the ROI / CAGR calculators instead of this one-line division.