Sir while calculating discount factor at 10
In bpp solution its given as
.909 .826 .751 14.11*.751 and in last its 0.043 can you please tell me from where did this last figure 0.043 come .Thanks
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seal island 6/10
11y ago#1The decommissioning takes place in 33 years time.
So...the since the cash flow is at current prices, to inflate it we multiply by 1.04^33
We then discount it at 10% and since 33 years is not in the tables, it means we have to use the formula for the discount factor. 33 years at 10% gives a discount factor of 1/((1.10)^33) which equals 0.043
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