CAPITAL & RECOVERY

When does an investment recover its cash?

Enter an initial outlay and uneven future cash flows at specific month ends. Compare the first undiscounted and discounted recovery dates, including any later reversal.

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Your planning assumptions

Start with the example, then change the inputs.

CurrencyUse one currency for every amount. Enter 5,000 for five thousand; changing the currency label does not convert your inputs.

Investment at month zeroCash paid at the start. Enter the outlay as a positive amount; the tool starts cumulative cash below zero.

Effective annual discount rate / %Annual rate used to express future cash in today’s value. Enter 21 for 21%; the tool adjusts for each flow’s month.

When will the project return cash?

The initial investment above is paid at month 0. Enter each later receipt or additional outlay in $, with its month after that investment. Month 12 is one year later. Leave out months with no flow, but include later maintenance or closing costs even if the investment has already paid back.

Cash flow 1

Flow 1: month after investmentWhole month 1–600. Use increasing dates; skipped months have no cash flow.

Flow 1: net cash flow ($)Cash received is positive. Additional investment or spending is negative.

Cash flow 2

Flow 2: month after investmentWhole month 1–600. Use increasing dates; skipped months have no cash flow.

Flow 2: net cash flow ($)Cash received is positive. Additional investment or spending is negative.

2 cash flows. Keep 1–120 dated entries.

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Methodology

Recovery follows the dates cash actually arrives.

The initial outlay starts cumulative cash below zero. Add each supplied net cash flow at its stated month end. Undiscounted payback is the first supplied date at which cumulative cash is nonnegative; no fractional date is inferred between receipts.

Discounted payback uses each cash flow’s present value at an effective annual discount rate, with month count divided by 12. The step chart keeps the balance unchanged between cash-flow dates. Later negative flows may reverse an initial recovery, which is flagged separately.

Cumulative cash = −initial investment + received net cash flows

Present value at month m = cash flow ÷ (1 + annual rate)^(m ÷ 12)

Discounted cumulative cash = −initial investment + received present values

Payback date = first supplied month end with cumulative balance ≥ 0

Illustrative worked example

Invest $100 at month zero and receive $60 at month 12 and $60 at month 24. Undiscounted cumulative cash is −$40 and then $20, so payback is month 24. At 21% effective annual discounting, the receipts are worth about $49.59 and $40.98 today. Their $90.57 total does not recover the initial $100 in the supplied schedule.

Worked example values
Measure	Illustrative result
Initial investment	−$100.00
Cash balance at month 12	−$40.00
Cash balance at month 24	$20.00
Discounted balance at month 24	−$9.43

Assumptions and limits

Payback screens liquidity timing, not total investment merit. It ignores returns after first recovery; compare the full schedule and an appropriate NPV analysis.
A missing recovery date means no payback in the supplied schedule. Future unentered flows are not forecast or assumed.
Month ends are relative to the investment date, not exact calendar dates. No day-count, within-month interpolation, IRR, financing or terminal value is supplied.
The discount rate is a scenario assumption, not a recommended hurdle rate. Match the cash-flow currency, inflation and risk basis before use.
Payback requires the cumulative balance to reach zero before rounding. A small remaining shortfall still means the investment has not recovered; use the detailed cash schedule when displayed cents appear close to zero.

Can an investment pay back and then lose cash again?

Yes. Later maintenance, refurbishment or closure costs can push cumulative cash below zero after the first recovery. The tool flags this reversal for either series; a first payback date should not be described as permanent cash recovery or profit.

Primary methodology references

ACCA: payback and discounted payback. Use net cash flows and explicit receipt timing; discount flows before accumulating for discounted payback. Month-end input dates and annual-to-month exponents are this calculator’s stated conventions.

Worked examples explain the calculation, not expected business results.

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