The time period over which a firm requires that it earns the cost of new equipment in profits if it is to invest. Pay-back period is not an economically rational investment criterion: with, say, N years being the target, it passes a project which brings in 101 per cent of its cost in the first N years and nothing thereafter, even though the present discounted value of the expected profits is well below 100 per cent, and fails a project which brings in only 99 per cent of its cost in the first N years, but is expected to do so well later that its present discounted value is 200 per cent of costs.