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Here in the question it told to calculate the adjusted payback period but I can’t understand that it is for 1-5yrs but we calculated for 4yrs and how the answer is just under 3yrs?
Pls explain the solution
The adjusted payback period is the number of years it takes for the discounted cash flows to repay the initial investment.
The project lasts 5 years, but the PV of the inflows covers the initial investment after just under 3 years.
I suggest that you watch my free lectures on this. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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