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dear Mr Moffat,
Looking at the flow of the information in this Question, I concluded that if generation of electricity is starting in 3 year’s time, then there must be cash-flows at the end of year 3 , which will make the calculation starts from year 3 .I am surprised to note that BPP is starting from year 4…Please shed more light on this0 is ‘now’ (the start of the first year)
1 is not a year – it is a point in time one year from now. So 1 is the end of the first year/start of the second year (we are not bothered about plus or minus 1 day when we come to discount)We always assume that operating flows occur at the ends of years (unless told differently).
So….in Fuelit, generation starts at time 3 (3 years from now). The first cash flows will occur at the end of the year, which is 4 years from now.
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