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Dear Sir,
During calculation of payback period, after cumulative balance divided by cash in flow, when should multiply by 12 months because sometimes i noticed, there were not multiply by 12 months just used as months whatever result got after divided.
Thanks,
Unless the question specifically states otherwise, we usually just leave the payable period in years.
So, for example, if the payback period is 4.23 years, then either leave it as 4.23 or if you prefer then write is as 4 years 3 months (to the nearest month).It is not very often that the payback period is examined in Paper FM because it is examined in Paper MA.
Dear Sir,
September/Dece 2018 sample question
No 32 Oscar,
In option 1 calculation, why should not include 2% bad debts ? I think it should be cost to company , I know it’s not non recourse
Thanks
In future please start a new thread when asking about a different topic. It is because many students use the search box to see if their questions have already been answered, and our answers are to help everyone.
Under option 1, the company will be suffering the bad debts whether or not they use the factor. Therefore there is no saving of bad debts when using the factor.
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