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For the 3 months to april 2015, projection cash inflows were revised to $76m.
Thus the net present value is revised to $56m. They discounted it by period 1 factor. Why don’t we discount it by 0.961
(Period 2 discount factor)?Moreover, how are the fair value gains calculated ?
Thank in advance for your help
Hi,
We use the period 1 factor as we are looking at the treatment at 31 January 2015 for cash flows that arise on 30 April 2015, which is one quarter/period ahead in the future.
The gains are calculated as the difference in the fair value on 30 April 2015 and that which was recorded on 31 January 2015.
Thanks
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