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Hello Sir ,
On question 1 of the specimen exam in the answer under Acceptability they calculate the payback period for both options ( i calculated the payback and I got different answers )
Please assist
Thanks
HalaRestaurant:
Cumulative cash inflows at each time
0 -5
1 -5.5
2 -5
3 -4
4 -2.5
5 -0.5So another 0.5 inflow is needed which is 0.25 times the year 6 inflow of 2. Hence PB = 5.25
Hotel
0 -21
1 -21
2 -17
3 -12
4 -6So another 6 is needed which is 6/7.5 = 0.8 the way through year 5. Hence PB = 4.8
Thank you sir ,
Another question please , why they didn’t include the grant amount in the cash flow estimates ? ( is it because they are not sure they will get it ? Or they are not sure of the amount ? )Thanks again
At the moment, both. We certainly can’t include a figure in the PB as we don’t know how much. We could comment that the PBs might be shorter because grants might be received.
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