Interactive Concept: Discounted Payback Period

Discounting shrinks every cash flow, so recovering your investment always takes longer than the simple payback period suggests.

Discount Rate (WACC)

This rate discounts each future cash flow back to today before applying it to the outstanding balance. A higher WACC means each cash flow is worth less in today's dollars, extending the recovery timeline.

11.6%
CASH FLOW RECOVERY DIAGRAM
Each cash flow is discounted to its present value, then applied to the outstanding balance. A higher WACC shrinks every one and pushes recovery further out.
x
Initial Investment (CF₀)
The upfront outflow at time zero. Always treated as negative.
Initial Investment
--
Upfront outflow at time zero
Discounted Payback Period
--
Years to full recovery (discounted)
Recovery Status
--
--

Discounted Payback Breakdown

Each cash flow times its discount factor (WACC) gives the discounted CF. Recovery is the first year the running balance turns positive, and the decimal is how far into that year was needed.

Year Cash Flow Discount Factor* Discounted CF Cumul. Balance Status

* Discount factor = 1 / (1 + r)t, where r is your WACC and t is the year number.