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The answers to the ‘duration’ question is:
The result indicates that it will take approximately 2.78 years to RECOVER HALF the present value of the project.My question:
What’s the meaning of ‘Recover half’ in the answer?Thanks
It means to get half of the total PV of the project.
In fact it is only approximate, but the examiner does expect you to write it if there is a written part of a question on it.
my understanding is duration is to measure the average time to recover the present value of the project.
But right now, the ans shows: 2.78 years to RECOVER HALF the present value of the project.
I don’t know why RECOVER HALF is used.
I think it should be: 2.78 years to RECOVER the present value of the project, without the need to use HALF.Or, like your explanation, it’s just approximate, so Recover half and Recover can both be used?
Thanks
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