About the Discounted Payback Period Calculator
The ordinary payback period ignores the time value of money, so it makes slow projects look better than they are. This calculator discounts every cash flow first and then finds when the running total turns positive. Enter the discount rate and the cash flows, starting with the money paid out at period 0, and it shows the discounted payback beside the ordinary one with a row for every period. Type the discount rate and the cash flows and the discounted payback period appears at once, with a few related figures underneath, and you can copy the result with one tap. The sums run in your browser, so nothing you enter is uploaded.
Updated October 2026
How to use the Discounted Payback Period Calculator
- 1Enter the discount rate and the cash flows.
- 2Pick the units or options from the menus if the discounted payback period tool offers them.
- 3Read the discounted payback period in the large result box.
- 4Look at the extra rows for related figures.
- 5Press Copy result to keep the answer.
When you need the discounted payback period
Managers compare projects with it, and students meet it in capital budgeting courses next to NPV and IRR.
A project can pay back in 2.5 periods on paper and take over three once money is discounted. A higher discount rate lengthens the discounted payback, and some projects never reach it.
How the discounted payback period is worked out
Present value of a cash flow = cash flow ÷ (1 + rate)^period. Add them up period by period; the payback is the last period before the total turns positive plus the unrecovered amount divided by the next present value. An outlay of 1,000 followed by four returns of 400, discounted at 10%, is still 5.26 short after period 3 and gains 273.21 in period 4. The discounted payback is 3.02 periods, against 2.5 periods without discounting.
Every answer on this page comes from that one rule, so you can check any result by hand with a calculator. The figures shown underneath, such as other units, are conversions of the same answer.
- Ordinary and discounted payback
- Row for every period
- Handles uneven cash flows
Mistakes to avoid with discounted payback period
The tool measures speed of recovery, not total profit, so a project with a short payback can still have a lower NPV. Use periods of the same length as the discount rate, such as years with a yearly rate.
On phone and computer
On a phone, type into the boxes one after another and read the discounted payback period underneath; Copy result puts it on the clipboard for a message or a note. On a computer the inputs sit on the left and the answer on the right, so you can change one figure and watch the discounted payback period move. The discounted payback period calculator works the same on both.
Checking your discounted payback period by hand
A good habit is to test the discounted payback period calculator with a case you already know. An outlay of 1,000 followed by four returns of 400, discounted at 10%, is still 5.26 short after period 3 and gains 273.21 in period 4. The discounted payback is 3.02 periods, against 2.5 periods without discounting.
If your own figures give a surprising answer, repeat the working yourself: Present value of a cash flow = cash flow ÷ (1 + rate)^period. Add them up period by period; the payback is the last period before the total turns positive plus the unrecovered amount divided by the next present value. Small differences usually come from rounding, from mixing units, or from a typing slip in one of the inputs. Discounting makes the payback longer than a plain count of years, so compare the two. Use the Payback Period Calculator for the simple version, the NPV Calculator to see the total value, and the IRR Calculator to find the return rate of the same cash flows.
Features
- First cash flow must be negative
- Match rate and period length
- Payback ignores later cash flows
- Clear messages when the discounted payback period inputs make no sense
- Copy the result with one tap
- Private: nothing is uploaded
Frequently asked questions
How do I calculate discounted payback period?
Present value of a cash flow = cash flow ÷ (1 + rate)^period. Add them up period by period; the payback is the last period before the total turns positive plus the unrecovered amount divided by the next present value. An outlay of 1,000 followed by four returns of 400, discounted at 10%, is still 5.26 short after period 3 and gains 273.21 in period 4. The discounted payback is 3.02 periods, against 2.5 periods without discounting.
What is the formula for discounted payback period?
Present value of a cash flow = cash flow ÷ (1 + rate)^period. Add them up period by period; the payback is the last period before the total turns positive plus the unrecovered amount divided by the next present value. The discounted payback period calculator applies it exactly and rounds only the displayed answer to six significant figures.
What is the difference from ordinary payback?
Ordinary payback adds raw cash flows, while discounted payback first reduces future cash flows by the discount rate.
What if it says not paid back?
The discounted returns never add up to the starting outlay within the periods you entered.
Should I also check NPV?
Yes. NPV shows total value, which payback does not.
Is this discounted payback period calculator free and private?
Yes. It is free, needs no account and runs in your browser, so the numbers you type are not uploaded or stored.