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how to calculate the Pa for hanu co
and how did they find the hanu co offer is equivalent a put optionsGiven that the offer is to buy the Uwa project at the start of the third year, Pa is the present value of the flows after the start of the third year i.e. the total of the PV’s of the time 3 and time 4 flows as calculated in appendix 1.
It is a put option because they have the option to sell (just as with the option to abandon).
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