payback period

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:31AM in AAT student discussion
Hi can anyone help me. Im doing december 03 past paper and im on task 2.4 payback period have you got to take the variable costs away from the sales revenue to work the payback period out. I have done this but i work the payback period as 2 Years and 10 months i divided the net cashflow which was 290,000 by cashflow of 320,000 x12 but the answer says its 2 years and 9 months just wondering have i done anything wrong.
Please could anybody help.
:(

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:payback period

    Your calculation is correct. Actually the AAT model answer doen't say 2 years 9 months but 2.9 years. I believe that the AAT would accept either form of answer as correct.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:payback period

    Thanks thats great, so my answer would have been accepted, great.

    Thanks again
    ALY

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:payback period

    What's the calculation to get the answer to work out as 2.9 years rather than 10.88 months. I can only see the calculation to work out the months in my book.

    Thanks!

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:payback period

    You are right
    2.9 years (my recommended answer)
    or 2+ (0.9 x 12) = 2years and 10.88 months

    2.9 years is found by :-
    2 years + (£290/£320) = 2 + 0.9 = 2.9 years
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:payback period

    Excellent, thanks Sandyhood!

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