Definition of Payback

Payback

The length of time it takes to recover the initial cost of a project, without regard to the time value of money.

Payback

A method of investment appraisal that calculates the number of years taken for the cash flows from an investment to cover the initial capital outlay.

Payback

The length of time required for the net revenues of an investment for the net revenues of an investment to return the cost of the investment.

Discounted payback period rule

An investment decision rule in which the cash flows are discounted at an
interest rate and the payback rule is applied on these discounted cash flows.

Payback Period

The number of years necessary for the net cash flows of an
investment to equal the initial cash outlay

payback period

the time it takes an investor to recoup an
original investment through cash flows from a project

Payback method

A capital budgeting analysis method that calculates the amount of
time it will take to recoup the investment in a capital asset, with no regard for the
time cost of money.

payback period

Time until cash flows recover the initial investment of the project.

Break-even time

Related: Premium payback period.

Premium

1) Amount paid for a bond above the par value.
2) The price of an option contract; also, in futures
trading, the amount the futures price exceeds the price of the spot commodity. Related: inverted market premium payback period. Also called break-even time, the time it takes to recover the premium per share of a
convertible security.

Credit

A rating of a company's credit (ability to payback debt), usually by a third party credit agency.

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