1. Project Management
  2. Business Value

Payback Period


The Payback Period indicates how long it takes for a project to recoup its initial investment, in months or years. It's a straightforward tool for understanding project risk and liquidity.


Payback Period = Initial Investment / Average annual cash inflow


If an initial project investment is $100,000 and it generates an average annual cash inflow of $25,000, the payback period is 4 years.