Dec 2016 Q4 Fernhust Part (a)

Hi Sir,

1. How do we calculate a project duration and what does it mean?

2. The answer seems to suggest calculating each year’s PV as a % of Total PV from Y1 to Y4, then multiplying the % calculated by the number of year, why is this so?

3. What if the PV for Y1 is negative, do we ignore it?

4. And why is it said thay 2.78 years is taken to recover half of its NPV? How was the information of “half of it’s NPV” derived?

Thank you.