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NW Co. is considering investing $40,000 in a new delivery truck that will last for 4 years, after which it will be sold for 57,000 Depreciation is charged on a
straight line basis. Forecast operating profits / (losses) are : 16,500; 23,500; 13,500 and (1 ,500). Assuming that the operational cash flows accrue evenly
during the year, what is the Payback Period for this investment?
Select the correct response:
I Year 7 months
2 Years 7 months
I Year 5 months
3 Years 2 monthsHi,
Thanks for your question but this is a CIMA P1 forum and investment appraisal (eg payback period etc) has moved from the P1 syllabus when it updated in 2019.This topic is now on CIMA P2 syllabus so if you are preparing for the P1 exam please ensure your study materials are up-to-date for the current syllabus
Thanks
Cath
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