How do we get 20% in the second question while discounting?I understand the questions given in the notes have given different percentage figures. I don’t understand how to apply it here.

As I explain in my free lectures (and as the answer to this question explains) you can use any two rates of interest – it does not have to be 12% and 20%.

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safashaikh19 says

How do we get 20% in the second question while discounting?I understand the questions given in the notes have given different percentage figures. I don’t understand how to apply it here.

John Moffat says

As I explain in my free lectures (and as the answer to this question explains) you can use any two rates of interest – it does not have to be 12% and 20%.

safashaikh19 says

thanks sir!

John Moffat says

You are welcome 馃檪

waqasnaeem16 says

Why we used operating profits for payback in this question?where payback should be calculated on returns….

John Moffat says

Payback period should be calculated using the cash flows, as explained in our free lectures.

If you are referring to question 1, then the question has given the operating cash flows and not the operating profits.

salardehbashi says

In this question, isn’t the NPV negative?

(33,830)

hanscad007 says

It is positive