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sir, but isn’t the quoted spot price for the day we are thinking about it, on 1st of december? shouldn’t it be adjusted to reflect the spot price for the day the cash flow takes place i.e. 13 months? what i understood from reading the ques was that the time between quoted spot rate and the time of cash flow was 13 months..
i am probably missing something obvious but i am still confused..Sir this was regarding Blipton hotel in bpp kit. The ques states that “it is now 1st of dec 2003…..current dollar/sterling ex rate is $1.4925/p….construction cost of hotel is P 6.2m and it will be built over 12 months to 31 dec 2004…all cash flow including the construction cost is assume to take place at end of the year concerned.”
The solution for the ques simply adjusts the inflation for 1 year ahead. shouldn’t it have been adjusted for 13 months? as you said it may be possible that i misread the question so sir please help me understand this.
also p = pound as there is no symbol for it in my laptop 🙂