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Hi,
In part C (i), the year 1 income plus interest for end of year 3 – 180(1*x)^2 is multiplied by 0.579 (year 3 discount rate) but the year 2 and year 3 income plus interest for end of year 3 is not multiplied by the discount rate. Why is that?
I do not know where you are finding this question, but I only have the original exam question and answer. There was no part (c) in the original question.
For burcolene, Kaplan has added an additional part (C). The link below has included part of the question
It would seem from the previous post that you have linked to, that the total amount of the cash remitted at the end of year 3 (how to arrived at that is explained in my answer) is then discounted for 3 years to get the PV now.
It seems from the post by ayeshatabani that this is what Kaplan has done in their answer also, but given that I do not have Kaplan books (only the BPP Revision Kit) I cannot check from myself.
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