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Hello Mr Moffat,
My question is about APV. In June 2014, question 2, would you please tell my why we are using the annuity factor of 4 years??!!!
As far as I understood, the loan is for TEN years, so these benefits on tax and subsidied benefit are for TEN years (and not just 4 years).
So WHY we dont use annuity of 10 years?!!!Thank you in advance
Kind regardsThe question says nowhere that the loan is for 10 years.
Since it is a 4 year project it is sensible to assume (in the absence of anything to the contrary) that the borrowing will be for 4 years.
Just because the interest rate is determined by reference to the 10 year government rate does not mean that they will be borrowing for 10 years.
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