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On this web page we show you how to use MS Excel Payback Period formula or function to compute Payback Period. Stop wasting time with arcane templates - we bet, here you will find all you need!

Payback Period Calculator

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What is Payback Period

Regular Payback period is a metric used to evaluate capital investment proposals. This does not take into consideration the time value of money. It refers to the time required to recover the initial investment or the initial cash outlay as it is called in financial terms.

Payback Period MS Excel Example

In MS Excel, place the cursor on Cell C3 and type

=SUM($B$2:C2)

Once you have typed this function click on cell C3 and copy its contents to cells D3 through F3 by clicking on COPY icon or pressing Ctrl+C. You can highlight the cells D3 through F3 by clicking and dragging the cells with cursor. Once these cells are highlighted press the Paste icon or press Ctrl+V

Now you have cumulated cash flows under each year. We are left with the task to find payback period. Cell B4 lies underneath CF₀, and we will place the text N/A in cell B4. The logic behind this will become apparent as the cell with the payback period will show a value and remaining cells with show the text N/A

Place the cursor in cell C4 and type the following text in it

=IF(AND(C3>0,B4="N/A"),B1 +(C2-C3)/C2,"N/A")

Click on cell C4 after typing this function and press Ctrl+C keys or Copy icon to copy this formula in other cells D4 through F4. You can highlight the cells D4 through F4 by clicking and dragging the cells with cursor. Once these cells are highlighted press the Paste icon or press Ctrl+V

The cell with the payback period will show the value, other cells will show the text N/A

MS Excel Payback Period Template

Download this MS Excel Template to find Payback and Discounted Payback Period