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Hello everyone
In Talam co , it says Jigu project is a follow on project to Uwa project4 years project) ,and will last for further 5 years .
Then it mentioned that it will start in 4 years time
My question is ,why in tne answer pv of future cash flows for T5,6,7 & 8? Why not T5,6,7,8,and 9?
In 4 years time means start of year 5 right??Are you looking at the original exam question and answer?
I ask because the answer does not calculate the PV of the future cash flows because it is effectively given in the question (the investment of 60,000 plus the NPV of 10,000).
‘In 4 years time’ means time 4 (which is the start of the 5th year), which is why the PV of 70,000 in 4 years time is then discounted for 4 years.
(There is no need to write ‘hello everyone’ because this is the Ask the Tutor Forum and so the only person answering will be me 🙂 🙂 )
Pardon ,John 🙂
I was confused because firt project will take full 4 years and jigu project will take further full five years to be completed i thought in 4 years time means end of year 4 start year 5 .
So whenever it says in 3 or 4 uears time that would be the t in bsop calculator time taken for starting and proceeding with the project
In 4 years time means at time 4 and it is 4 that would be the t in the formula.
In the Talam question you are told specifically that t = 4.
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