Option to Delay: Digunder

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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February 23, 2017 at 1:01 pm #373836
mansoor
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A very good afternoon to you sir …
u r the expunger of all confusion and i hope u will put the question Digunder 6 feet under!!!!!!!!!!!!!
i am looking at the examiner’s answer from the acca pdf file and not from any of the kits.
1. Is the answer he has given correct (part a)?
2. my understanding of the question is as follows: they have the permission to build the housing complex and if they spend the $24m now, they get an NPV of $4m. is this correct?
i have further questions so pls dont close this thread
regards
February 23, 2017 at 4:44 pm #373899
John Moffat
Keymaster
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Yes – his answer is correct 🙂
If the spend 24M then the NPV is 4M – so the PV of the returns must be 28M.
I am going to close this thread – if you have further questions then you should have written what your further questions were 🙂
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