Net present value of the project with put option = $3,444,000 – $451,000 = approx. $2,993,000
suppose if NPV was positive by same amount of $451,000, then what would the net present value of project with put option,will it be =$3,444,000 + $451,000 = approx. $3895000 ?
and what will be the present value of call option in each case if there is negative NPV and Positive NPV,
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Chmura Co dec 2013
Hi John , How is pa value calculated that is 30613600 in Present value of the underlying asset they have said that it is the pv of cflows forgone in year 3 4 5 can you spot me the figures of year 3 4 5 which adds up to 30613600??
8y ago#2It is the PV's at times 3, 4 and 5 (9946.5 + 7064.2 + 3543.9), plus the PV of land etc (8876) plus the PV of the working capital (1183)
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