NPV  Mock Exam
sophie_612
LondonRegistered Posts: 136
Hi,
Would someone be able to explain to me how the worked out the npv and the payback on the attached?
Thanks
Sophie
Would someone be able to explain to me how the worked out the npv and the payback on the attached?
Thanks
Sophie
0
Comments

Npv
260000 this is your initial cost and is negative figure, the rest are positive figures and represent income
260000+44828.6+44632+40868.8+37587.60+36174.6=55908.4
The npv is negative so the projrct us not viable and should nit go aheadAAT Level 2. 2018 Distinction
AAT Level 3. 2018 Distinction
AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%
Xero Certified Advisor0 
Payback is the time that it takes to repay the initial cost in this case 260000. Using the net cash flow we add income untill we reach 260000
50200+56000+57400+59000=222700
We require just a fraction (37300)of the year 5 income, therefore
4 y +(37300/63800*12 months) =4 y and 7 monthsAAT Level 2. 2018 Distinction
AAT Level 3. 2018 Distinction
AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%
Xero Certified Advisor0 
thank you so much for explaining.dumutroba said:Payback is the time that it takes to repay the initial cost in this case 260000. Using the net cash flow we add income untill we reach 260000
50200+56000+57400+59000=222700
We require just a fraction (37300)of the year 5 income, therefore
4 y +(37300/63800*12 months) =4 y and 7 months0