Fidamen

Discounted Payback Period Calculator

This calculator estimates the discounted payback period: the time (in years) required for the cumulative present value of cash inflows to recover the initial investment. It discounts each annual cash flow using the user-provided discount rate and applies linear interpolation inside the payback year for a fractional-year result.

Use this tool for preliminary project screening and comparison of mutually exclusive investments. The discounted payback provides a time-based risk perspective by accounting for the time value of money, but it does not measure total project profitability beyond the payback horizon.

Updated Nov 3, 2025QA PASS — golden 25 / edge 120Run golden-edge-2026-01-23

Governance

Record 408dfbd1fce3 • Reviewed by Fidamen Standards Committee

Discount cash flows for each year, compute cumulative discounted cash flows, and determine the first year where cumulative discounted inflows equal or exceed the initial investment. Uses linear interpolation within the year to estimate fractional years.

Inputs

Results

Updates as you type

Discounted payback period (years)

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OutputValueUnit
Discounted payback period (years)—years
Primary result—

Visualization

Methodology

We discount each annual cash inflow by (1 + r)^t where r is the discount rate in percent divided by 100 and t is the year number. Cumulative discounted cash flow is calculated year-by-year until it equals or exceeds the initial investment.

When cumulative discounted cash flow crosses the initial investment during year t, a linear interpolation inside that year is used to estimate fractional years: payback = (t-1) + (remaining_to_recover / discounted_cash_flow_in_year_t).

This implementation is a discrete, annual schedule calculator (not a continuous-time model). It supports up to ten annual periods. For monthly cash flows, irregular schedules, tax effects, salvage values, or probabilistic modelling, use more detailed NPV/IRR analyses or specialized financial modelling tools.

Worked examples

Example: Initial investment 100,000; discount rate 10%; annual inflows 30,000 for 5 years. The calculator discounts each inflow and finds cumulative discounted inflows exceed 100,000 during year 4, then interpolates to give a fractional payback year (e.g., 3.7 years).

If discounted cash flows are zero or negative for all provided years, the calculator will return no payback result within the entered horizon.

F.A.Q.

What is the difference between payback period and discounted payback period?

The undiscounted payback period uses raw cash flows and ignores the time value of money. The discounted payback period discounts each cash flow at the chosen discount rate before summing, so it accounts for the time value of money.

Why might the calculator return no result (null)?

If cumulative discounted cash inflows do not reach the initial investment within the number of years you entered, the payback cannot be determined from the provided horizon. Increase the number of periods or review cash flow inputs.

How accurate is the interpolation inside the year?

Interpolation assumes cash receipts are received uniformly across the year. This is a common practical approximation; if cash flows are lumped at specific sub-annual dates (monthly, quarterly), a higher-resolution schedule should be used.

Are there any verification or accuracy standards for this calculator?

This calculator follows general software quality and verification best practices. For numerical verification, refer to ISO/IEC software quality standards and IEEE recommendations for numerical software testing. See citations for authoritative sources.

Sources & citations

Further resources

External guidance

Versioning & Change Control

Audit record (versions, QA runs, reviewer sign-off, and evidence).

Record ID: 408dfbd1fce3

What changed (latest)

v1.0.0 • 2025-11-03 • MINOR

Initial publication and governance baseline.

Why: Published with reviewed formulas, unit definitions, and UX controls.

Public QA status

PASS — golden 25 + edge 120

Last run: 2026-01-23 • Run: golden-edge-2026-01-23

Engine

v1.0.0

Data

Baseline (no external datasets)

Content

v1.0.0

UI

v1.0.0

Governance

Last updated: Nov 3, 2025

Reviewed by: Fidamen Standards Committee (Review board)

Credentials: Internal QA

Risk level: low

Reviewer profile (entity)

Fidamen Standards Committee

Review board

Internal QA

Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person

Semantic versioning

  • MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
  • MINOR: New features or fields that do not change existing outputs for the same inputs.
  • PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.

Review protocol

  • Verify formulas and unit definitions against primary standards or datasets.
  • Run golden-case regression suite and edge-case suite.
  • Record reviewer sign-off with credentials and scope.
  • Document assumptions, limitations, and jurisdiction applicability.

Assumptions & limitations

  • Uses exact unit definitions from the Fidamen conversion library.
  • Internal calculations use double precision; display rounding follows the unit's configured decimal places.
  • Not a substitute for calibrated instruments in regulated contexts.
  • Jurisdiction-specific rules may require official guidance.

Change log

v1.0.0 • 2025-11-03 • MINOR

Initial publication and governance baseline.

Why: Published with reviewed formulas, unit definitions, and UX controls.

Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: 47c7a663b9cc