Payback period

How long a project takes to return its initial outlay. The ₹1,000 crore investment above is repaid during year three.

It is theoretically crude, because it ignores everything after the payback date and, in its simple form, ignores the time value of money entirely.

It survives in practice for two good reasons. It is a rough proxy for risk, since a project returning its money in two years is exposed to less forecasting error than one taking nine. And it is a liquidity test that a small business genuinely needs, whatever the net present value says.

Use it beside a discounted measure, never instead of one.