what are some of the downsides of using the payback period 
as the equation above shows the payback period calculation is a simple one it does not account for the time value of money the effects of inflation or the complexity of investments that may have unequal cash flow over time the discounted payback period is often used to better account for some of the shortcomings such as using the present value of future cash flows for this reason the simple payback period may be favorable while the discounted payback period might indicate an unfavorable investment 