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Heyy John
part A
the discount for the year 4 could be
1-15 year annuity 7.191
3-15 year annuity 2.444
4-15 year annuity 4.747why it took 7.191 * .731
and second question the investment is made in year 1 it need to be discounted by .909 , why it is discounted by 1 (is it bcoz of immediate investment)
The flows are for 15 years, and therefore are from 4 – 18
So either take the 18 year annuity factor (which you would have to calculate yourself) and subtract the 3 year annuity factor.
or
Take the 15 year annuity factor and multiply by the ordinary 3 year factor, because the annuity starts 3 years late (i.e. at time 4 instead of time 1).
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