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Hello dear Tutor
Why in guestion Casasophia(6/11) we take into account that project start in 6 month but in guestion Okan co( first guestion of september/december 2019 past paper) we dont take it into account in calculations. Also we take into account that project start in one year in guestion Hathaway co.( 3rd guestion march 2020 past paper). How we have to decide when we have to do it and when not
Thanks in advanceIt depends on the wording in the question.
Okan specifically asks for the APV in six months time, and that is what is calculated in the answer.
Hathaway is different in that it just asks for the NPV without stating when, and in that case it is the NPV “now”. In addition the question is asking for comparison with selling for 4.3M immediately which again needs to be compared with the NPV “now”.
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