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Dear John,
in the question I do not understand
+ why the investment in year 3 not be discounted at WACC to claculate Pe
+ Development cost normally be ignored as a past cost, but in the question the cost be considered as project costThanks for clarification
I have the December 2012 real exam in front of me, and the question Lignum has nothing about real options in either the question or the answer!
Sorry Sir, the question be modified in the latest BPP revision book, I will copy the question when I back home
Dear John, the forum did not allow to attach any file, therefore I could not show the question, anyway, the principle of value the Real option is the Pa and P3 should be calculated base on Present value, is it right, as someone said the Pe should not be discounted as in the BSOP formula, the Pe x e is discounted already, pls. advise
Much thanksWithout seeing the actual question, Pe should not be discounted – it is the exercise price and is there the exact (undiscounted) amount.
I would be appreciated if you could share your email in my personal email: pnmphuong@gmail.com, so that i could send you the question and we finally could sort out the unclear issues, thanks
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