# NPV - Mock Exam

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

• AAT Student, AATQB Posts: 264
edited January 2019
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 ahead
AAT Level 2. 2018 Distinction
AAT Level 3. 2018 Distinction
AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%
• AAT Student, AATQB Posts: 264
edited January 2019
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 months
AAT Level 2. 2018 Distinction
AAT Level 3. 2018 Distinction
AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%
• LondonRegistered Posts: 136
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 months

thank you so much for explaining.