Metics resturant (jun 12)

4.5 is not used as the discount rate, it is used to work out the terminal values of cash receipts so as to estimate the terminal values of these flows. Using the cc of 12.5% here would be valid only if there were projects earning the cc. In the absence of any, the cash would have to be put on deposit at 4.5%. Overall METIS is a very odd and rather old question and don't spend long trying to understand it.