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..First Receivable in 3 years time. Here is the wording question. It means from the beginning of the 3rd year? or 4th year? i just dont understand how is it is the beginning of the 3rd year if 3 years didnt pass yet.
We discount to remove interest, and we are looking at points in time that are 1 year apart.
Time 0 is the beginning of the first year.
Time 1 is the end of the first year and start of the second year (we are not worried about 1 day).
Time 2 is the end of the second year and start of the third year.
Time 3 is the end of the third year start of the fourth year.If a flow is first receivable in 3 years time then we need to discount for 3 years to account for 3 years interest. It is irrelevant what year it is the beginning or end of!
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