Investment 450K
Cash Discounted Disc Cash flow 10% Cash Flow CumulativeCash flow
Investment 450 1 450 (450.00)
Year 1 130 0.909 118.17 (331.83)
Year 2 130 0.826 107.38 (224.45)
Year 3 130 0.751 97.63 (126.82)
Year 4 130 0.683 88.79 (38.03)
Year 5 150 0.621 93.15 55.12
The answer is 4 year 5 months.
However, based on my calculation 38.03/150 x 12 mths is 3 months.
Can please advise, why it is 5 months instead of 3 months.
Thank you.
ACCA Forums
MADiscounted Payback period
Why are you dividing it with 150?
Thats the non-discounted profit received. You should be using its discounted amount i.e 93.15.
(38.03/93.15) x 12 = 4.899 or 5 months.
Hope it helped you.
Hi Secondstar
Appreciate, thank you.
@clalim2205 said: Hi Secondstar Appreciate, thank you.You are welcome :)
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