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Hi John,
Please could you kindly let me know for Washi, why the project which started a year later has not been discounted in year ‘0’. As year 0 is 1 year away therefore needs to be discounted as such? Just as the exchange rate is taken for 1 year later.
Very confused
Thank you =)
(c) (ii) specifically asks for the NPB to be calculated with the end of the first year being time 0.
(the examiner is confusing by referring to ‘year 0’ when he really means ‘time 0’. For discounting purposes time 0, time 1 etc. are points in time that are 1 year apart.)
We need the cash flows at time 0, time 1 etc., but since time 0 is one year from now it is the exchange rate one year from now that is relevant.
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