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Hi John,
A project requires an initial outlay of 100000 and will generate net cash inflows of 40000 per annum. What will be the adjusted pay back period for this investment at 10% cost of capital.?
According to me it will be 3 years and 2 months whereas the solution says 3 years only. This is given in the BPP mock exam. Kindly explain where did i go wrong.
Thanks in advanceIt would help if I could see the exact question – assuming you mean the mock exam in the BPP Revision Kit, please say which exam and which question 🙂
By adjusted payback period, I am assuming you mean the discounted payback period (adjusted payback period is not a standard term in the exam), in which case the answer is 3 years 2 months. Are you sure that the question does not ask for it to the nearest year?
Adjusted payback period is discounted pay back period. I have copied the exact question for you here John.
It is from the mock exam of BPP online. It did not say nearest year.
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