LCM of three numbers

Payback Period Calculator

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✖The Initial Investment is the amount required to start a business or a project.ⓘ Initial Investment [Initial Invt]			+10% -10%
✖Cashflow per Period refers to the amount of money that is either received or paid out at regular intervals.ⓘ Cashflow per Period [C_f]			+10% -10%

✖Payback Period is a financial metric used to evaluate the time it takes for an investment to generate enough cash flow to recover its initial cost.ⓘ Payback Period [PBP]

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Payback Period Solution

STEP 0: Pre-Calculation Summary

Formula Used

Payback Period = Initial Investment/Cashflow per Period
PBP = Initial Invt/C_f
This formula uses 3 Variables

Variables Used

Payback Period - Payback Period is a financial metric used to evaluate the time it takes for an investment to generate enough cash flow to recover its initial cost.
Initial Investment - The Initial Investment is the amount required to start a business or a project.
Cashflow per Period - Cashflow per Period refers to the amount of money that is either received or paid out at regular intervals.

STEP 1: Convert Input(s) to Base Unit

Initial Investment: 2000 --> No Conversion Required
Cashflow per Period: 1500 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

PBP = Initial Invt/C_f --> 2000/1500

Evaluating ... ...

PBP = 1.33333333333333

STEP 3: Convert Result to Output's Unit

1.33333333333333 --> No Conversion Required

FINAL ANSWER

1.33333333333333 ≈ 1.333333 <-- Payback Period

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Kashish Arora

Satyawati College (DU), New Delhi

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< Capital Budgeting Calculators

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After-Tax Cost of Debt

LaTeX Go After Tax Cost of Debt = (Risk Free Rate+Credit Spread)*(1-Tax Rate)

Payback Period

LaTeX Go Payback Period = Initial Investment/Cashflow per Period

Cost of Debt

LaTeX Go Cost of Debt = Interest Expense*(1-Tax Rate)

Payback Period Formula

LaTeX Go

Payback Period = Initial Investment/Cashflow per Period
PBP = Initial Invt/C_f

What is Payback Period?

The payback period is a financial metric used to evaluate the time it takes for an investment to recoup its initial cost through the cash flows it generates. It measures the length of time required for an investment to repay its initial outlay, making it a straightforward measure of investment risk and liquidity. The calculation involves dividing the initial investment cost by the annual cash flows generated by the investment. The payback period is expressed in years or months, depending on the duration of the investment and the frequency of cash flows.

Investors typically use the payback period to assess the risk associated with an investment by comparing it to other investment opportunities. A shorter payback period is generally preferred as it indicates a quicker return of the initial investment. However, the payback period does not consider the time value of money, inflation, or cash flows beyond the payback period, which limits its effectiveness as a comprehensive investment evaluation tool.

How to Calculate Payback Period?

Payback Period calculator uses Payback Period = Initial Investment/Cashflow per Period to calculate the Payback Period, The Payback Period formula is defined as a financial metric used to assess the time it takes for an investment to generate cash flows sufficient to cover its initial cost. Payback Period is denoted by PBP symbol.

How to calculate Payback Period using this online calculator? To use this online calculator for Payback Period, enter Initial Investment (Initial Invt) & Cashflow per Period (C_f) and hit the calculate button. Here is how the Payback Period calculation can be explained with given input values -> 1.333333 = 2000/1500.

FAQ

What is Payback Period?

The Payback Period formula is defined as a financial metric used to assess the time it takes for an investment to generate cash flows sufficient to cover its initial cost and is represented as PBP = Initial Invt/C_f or Payback Period = Initial Investment/Cashflow per Period. The Initial Investment is the amount required to start a business or a project & Cashflow per Period refers to the amount of money that is either received or paid out at regular intervals.

How to calculate Payback Period?

The Payback Period formula is defined as a financial metric used to assess the time it takes for an investment to generate cash flows sufficient to cover its initial cost is calculated using Payback Period = Initial Investment/Cashflow per Period. To calculate Payback Period, you need Initial Investment (Initial Invt) & Cashflow per Period (C_f). With our tool, you need to enter the respective value for Initial Investment & Cashflow per Period and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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