- This topic has 1 reply, 2 voices, and was last updated 6 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
They have given in qs that digunder has an option to purchase a plot of land at 24m which is exercised in 2 years time so will it not be the initial investment after 2 years and shouldnt it be discounted at 10% for 2 years to get initial investment at year 0
No. The 24M is not paid now – it is the exercise price in 2 years time.
Have you not watch my lectures on real options, because I work through an almost identical example in the lecture?
(Also, depending on where you are finding the question, the original examiners answer was not correct (as the current examiner has since confirmed). My lecture is correct 🙂 )
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.