payback period

English - English

Definition of payback period in English English dictionary: The payback period estimates the time it takes to recover the implementation costs of the investment Reference: DON IT Investment Portfolio Model, page J-A-8; The number of years required for an organization to recapture an initial investment This may apply to an entire business operation or an individual project; The length of time required for an investment's net revenues to cover its cost; the length of time it takes to realize a profit on an investment; In capital budgeting, the number of years that must pass before the earnings a product produces equal the initial investment in the product; The elapsed time from the commencement of expenditure on a project to the point where the value of benefits have exactly covered accumulated costs; the amount of time required for cumulative estimated future income from an investment to equal the amount initially invested It is used to compare alternative investment opportunities; period of time required until income from an investment is worth its cost; The length of time it takes to recover the initial cost of a project, without regard to the time value of money For example, if a project costs $100 and brings in $20 per year, the payback period is 5 years; (see break-even); The amount of time required for a project's after-tax cash inflows to accumulate to an amount that covers the initial investment; the time taken for a new product to recover its investment cost and to generate profits; used as a measure of performance for new products; The time necessary for the cash flow generated from a project to equal the initial amount invested