HELP cost and revenues

matty ellis · June 2013

I found some material and seems so long ago I did a lot of this.

I am fine with most of it just a few daft things.

On the cbt 1 on AAT 2.5B how do I get the payback period 2 years and 4 months

honestly tried loads of combinations on a calculator and can't seem to get it.

thanks in advance.

Nps · June 2013

Hi,

You get the answer by using the actual sales flow values, not the present value ones. So in year 1 you recoup £300 of the £900 outlay, in year 2 you recoup £410, leaving £190 to recoup in year 3. In year 3 you recoup £610 so that is £50.8333 per month. 190/50.8333 = 3.73 or thereabouts meaning the full cost of the machine is not recouped until the end of the 4th month of year 3, or 2 years 4 months.

mentorkeith · June 2013

Or you could take the remaining £190 divide by the total for 3rd year £610
190/610. This gives you a portion of the year that it takes to collect the payback = 0.3114754098360656 (equivilent to 31.1475% of the year) , then multiply 0.3114754098360656 by 12 months to give you the number of months it takes within the year = 3.737704918032787 or 3.74 months = 4 months. Answer = 2 years 4 months.

mentorkeith · June 2013

To simplify:
£190 divide by £610 multiply by 12. Easier to do this way because you don't need to retype part of the calculation but do all 3 one after the other on your calculator to give you 3.74 months

SammyRPA · June 2013

So glad this question was asked I couldn't get it either ha!

matty ellis · July 2013

Hi thanks for the help and sorry for the late reply, I passed my cost and revenue exam

Jo Clark · July 2013

Congratulations matty

HELP cost and revenues

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