In (i) part of this solution, we obtained n=13.17 But the discounted payback period is taken as 13.5 years. Why discounted payback period must be a multiple of 6 months ? Thanks in advance.
If all payments are received once every half year, then you would receive the payment that makes NPV of income = NPV of outgo only at the end of a ahalf year. Hence the DPP would also coincide with the end of a half year. therefore 13.5 and not 13.17 years. At the 13+0.17 years = 13 yrs and 2 months, you would not receive any cashflow.
