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John Moffat.
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richardscully
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Dear Sir
I notice that the answer sheet on Yilandwe does not include the opportunity cost on the NPV calculation. Furthermore, is that opportunity cost discounted? And further, I read the opportunity costs as 000, so millions, but i see it was just thousands, or was I wrong?
John Moffat
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The only opportunity cost is the los contribution, and the examiner mentions this at the end of his answer. It would be discounted (and you would not be wrong if you had brought it in) but as the examiner states, the amount is so low as to not affect the decision. He also deals with your last point in the very last line of his answer.
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