Free Discounted Payback Period Calculator

Q: Can I export discounted payback cash schedules to CSV?

Yes. You can export complete annual nominal cash flows, discount factors, cumulative discounted cash flows, NPV, PI, and 5x5 sensitivity matrices as a UTF-8 CSV spreadsheet with formula defense.

Step 1: Capital Investment, Annual Cash Inflow, Lifespan & Hurdle Rate (WACC)

Capital Budgeting Inputs

💰 Initial Outlay & Operating Cash Inflows

Initial Capital Outlay (Capex $)

Total upfront investment at t=0.

Year 1 Annual Cash Inflow ($)

Annual operating cash flow.

⏱️ Lifespan, Hurdle Rate & Growth

Lifespan (Years)

Operational horizon.

Hurdle Rate (WACC %)

Cost of capital discount rate.

CF Growth (%)

Annual cash growth %.

Discounted Payback (DPP)

3.94 Years

+0.81 yrs time-value delay vs simple payback @ 10% WACC

Net Present Value (NPV)

+$213K

Value-accretive investment (NPV > 0)

Simple Payback Period

3.13 Years

Undiscounted payback (ignores time value of money)

Profitability Index (PI)

1.21x PI

Benefit-Cost Ratio ($1.21M PV / $1.00M Capex)

Capital Matrix: Initial Capex vs. Hurdle Rate (WACC)

Simulates Discounted Payback Period (years), Net Present Value ($), and Profitability Index (PI) across upfront capital scale and cost of capital variations.

Initial Capex	WACC 6.0%	WACC 8.0%	WACC 10.0% (Base)	WACC 12.0%	WACC 14.0%

Corporate Capital Allocation

Understanding Discounted Payback & Time Value

Key capital budgeting principles governing project evaluation:

The Flaw of Simple Payback: Simple payback treats cash received in year 5 identically to cash received today, creating a false sense of liquidity and ignoring the firm's cost of capital.
The Payback Drag: Factoring in a 10% to 15% discount rate typically extends capital recovery by 6 to 18 months, revealing the true liquidity risk of long-horizon Capex.
Weighted Average Cost of Capital (WACC): Model corporate discount rates and capital structure in the WACC & Cost of Capital Lab.
Return on Invested Capital (ROIC): Evaluate post-investment returns in the ROIC & Capital Lab.

Evaluate lease financing alternatives in the Lease vs. Buy Capex Lab.

Mathematical Formulation

Capital budgeting equations

ext{Discounted Cash Flow}_t = rac{ ext{Cash Flow}_t}{(1 + r)^t}

ext{Discounted Payback} = t_{ ext{prior}} + left(rac{ ext{Initial Capex} - ext{Cumulative DCF}_{t_{ ext{prior}}}}{ ext{Discounted Cash Flow}_{t_{ ext{recovery}}}} ight)

ext{Net Present Value (NPV)} = sum_{t=1}^n rac{ ext{CF}_t}{(1 + r)^t} - ext{Initial Capex}

ext{Profitability Index (PI)} = rac{sum_{t=1}^n ext{DCF}_t}{ ext{Initial Capex}} = rac{ ext{NPV} + ext{Capex}}{ ext{Capex}}

Analyze capital structure leverage in the Debt-to-Equity Lab.

FAQ

Discounted payback period questions

What is the discounted payback period?

The discounted payback period is the amount of time required for the cumulative discounted present value of future cash inflows to equal the initial capital investment (Capex).

How does discounted payback differ from simple payback?

Simple payback ignores the time value of money, treating future dollars identically to current dollars. Discounted payback applies a discount rate (WACC), accounting for opportunity cost and risk, resulting in a longer and more realistic payback duration.

What is the Profitability Index (PI)?

The Profitability Index (benefit-cost ratio) is the ratio of the present value of future cash inflows to the initial capital outlay: PI = PV of Cash Inflows ÷ Initial Capex. A PI greater than 1.0 indicates a value-creating project.

Can a project have a valid simple payback but never achieve discounted payback?

Yes. If the total present value of cash inflows discounted at WACC never reaches the initial Capex (i.e. NPV < 0), the discounted payback period is infinite or exceeds the project lifespan even if nominal cash flows exceed Capex.

Can I export discounted payback cash schedules to CSV?