Q4 December 2012

Hi John, A strange thing: I've solved numerous questions and I was sure that Terminal Value should be discounted at discounted factor of the previous year, but I found the following answer for Q4: Net present value of PDur05 = ($2,500,000) + ($1,200,000 x 1·11^–1) + ($1,400,000 x 1·11^–2) + $970,000 x 7·191 x 1·11^–3 = ($2,500,000) + ($1,081,000) + ($1,136,000) + $5,100,000 = $383,000 Please clarify why the terminal value in this case is discounted at (1.11^-3 - not 1.11^-2). Why? Because it's not based on indexation based on the previous year? Thank you in advance.