Calculation of Pay back period

Payback Period
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Remmy, Australia

Calculation of Pay back period

How do we calculate payback period when the returns / cashflows are different each year?


Tichakunda Gumbo, Zimbabwe

Comment on payback period Tecnique

Your payback period calculation formular is somehow too generalised in that it assumes that all projects will have equal annual cashflows.What about those with different annual cashflows.?

Jaap de Jonge
Editor, Netherlands

Payback Period if annual cashflows vary?

In case the annual cashflows are not the same, the formula is still valid.
Suppose the same project is costing $200.000, but now the annual cashflows are: $30.000 (yr 1), $40.000 (yr 2), $50.000 (yr 3), $40.000 (yr 4), $20.000 (yr 5), $20.000 (yr 6), and $50.000 (yr 7).
After 6 years the total of all cash inflows equals the costs (investments) in the project. Therefore the Payback Period of our project is 6 years.

Peter Hansen, Neverland

Good resource

I found that this was a very useful website with relevant explanations and examples. Keep up the good work!

Herson Deleon, Philippines

Calculating payback period

Yes, it is difficult if the annual income of a certain company is not always constant. Obviously you... Sign up

Vishwa, India

Payback period calculation for Uneven cashflow over the years

Say my initial investment is $15,000 and my subsequent annual cash flows are 1) $11000, 2) $7000 and... Sign up

Ade Osunsanmi, UK

Pay back Period

I think the the pay back period is just a cumulative sum of money to PAY BACK the initial investment... Sign up

Gabriel Hogan, Ireland

Payback period

Payback period is a great method but if you are considering investments in innovation it has its dra... Sign up

Mukela Namushi Mubano
Accountant, Zambia

Payback Period

I do not think the formula dictates that the cash flows should be the same. Sometimes they may not b... Sign up

Azzam Ali
Analyst, Saudi Arabia

Many Terms

I observe that there are many methods calculating pp, and I wonder which one is the accurate one. Al... Sign up

Aser T. Alas, Jr.

Sample Payback Period Computation with Different Annual Cashflow

Payback period refers to the period of time required for the return on an investment to repay the su... Sign up


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