payback period

Investment recovery duration

The payback period is the time required for an investment to generate enough returns to recover its initial cost.

A solar panel system with a five-year payback period means the energy savings will equal the installation cost after five years.

Shorter payback periods indicate lower risk: The project has a payback period of eighteen months.

Related

initial investment · cash flow · profit · returns · timeline · horizon · capital · recover · months · years · calculation · threshold · analysis · depreciation · outlay · earnings · recuperate · financial

Categories
Opposites
investment metric type

payback periodnet present value

Discounted sum of cash flows

NPV · return on investment · ROI · IRR · total return

time horizon

payback periodperpetuity

Infinite continuation of time

endowment

financial outcome

payback periodtotal loss

Irreparably damaged item

sunk cost · write-off · money pit · black hole

Family

payback, period, back, paid, paying, payable, payment, payer, repayment

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