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Payback Period (Years)
Payback Period (Months)
Total Return After Period
Total ROI %
Payback period is the time it takes for an investment to recover its initial capital through generated returns. A business investing ₹10 lakh in equipment generating ₹2 lakh annual profit has a 5-year payback period. Payback period is popular because it's simple and shows risk: shorter payback means capital returned faster, reducing risk from market changes or business failure. However, payback period ignores returns after capital is recovered and doesn't account for time value of money (₹1 today > ₹1 later). Discounted payback period addresses this by discounting future returns. For a ₹10 lakh investment with ₹3 lakh return in Year 1, ₹3 lakh in Year 2, ₹4 lakh in Year 3, ₹5 lakh in Year 4, the simple payback is between Year 3-4; discounted payback takes longer due to time value adjustment. Decision rule: Shorter payback is better, but payback period alone shouldn't drive investment decisions—consider total ROI, risk, and strategic fit too. This calculator helps evaluate when capital will be recovered and supports go/no-go investment decisions.
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This calculator is provided for informational and educational purposes only. While we strive for accuracy, results should be verified with official sources or by consulting qualified professionals. Tax laws, rates, and regulations are subject to change. GotRedFlags is not responsible for financial decisions made based on these tools.