# could someone explain me how they got 2 years and four month at the end? dont know where they got it

could someone explain me how they got 2 years and four month at the end? dont know where they got it from. thanks is considering investing in one of the following indiv Example 18./ Wollensky Ltd is conside projects: Time (years) Project A Projects Project 0 Initial capital expenditure Expected annual 50,000 17,000 50,000 2,000 60,000 21,000 Remember that capital expenditures expenditure on fored profitilloss) 2,000 16,000 12,000 7,000 2,000 (18,000) 10,000 6,000 8,000 2,000 10,000 6,000 1,000 (4.000) 15,000 5 Estimated resale value of equipment Required Calculate the payback period for each project and, on this basis, advise Wollensky Ltd which project to invest in. Wollensky Ltd has a total of £60,000 available to invest. Wollensky Ltd depreciates non-current assets on a straight-line basis. Suggested solution First it is necessary to convert the income statement information into cash flow information. To do this, we need to adjust for depreciation (we are not told about anything else): Senden for PC 100 dark to the procesures to Projects Project ars Project LE The need to be ut the cheesported for each pro Te 50.000 25.000 20000 15.000 150.000 10.000 10.000 14,000 60.00% 300 75.000 15,000 1 5.000 5 5 110.000 DO 10.000 10,000 15,000 C m e the payback period for each project, we need to look at the iecho. Because we have more detailed information about the potem of expected cash flows than a simple average annual figure, we calculate the shack period in terms of years and months. Timelyears) Project A Project Project FE Especialistom 0 50.000 150.000 (60,0001 1 25,000) (40,000 30.000) 3 5 ,000 30,000) 5.000) 3 10000 116000 10.000 20,000 0 20,000 5 10.000 10.000 25,000 5 20.000 20.000 40.000 Project has a payback period of exactly four years. However, Project A has a payback period of between two and three years (as does Project C. Assuming that the Year 3 cash flows arise evenly throughout the year, Project A recovers the initial stay after two years and four months (as does Project C). On the basis of payback period, both Project and Project C have shorter paryhack periods to Proiest B and therefore Project B will not be chosen However, the payback periods for und Care qual, so on this basis alone it is impossible to choose between them Pause and think In this situation, how would you choose between Projects A and C?

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