Dear All I have a query on how to find discount factor in que 16 of IAI May 2013 examinations. Here Risk discount rate is 15% and Growth rate is 7% with probability 0.6 and 8% with probability 0.4. I have tried a lot but not able to match the discount factor used up in solutions. Also it is not clear why time 5 is used twice in scenario 1 table "Calculation of NPV" and how the figures arived for the second 5 row. Please somebody help, its urgent. Thanks in advance. Kind regards, Rajat
Hi. Have you looked at other threads on this question eg https://www.acted.co.uk/forums/index.php?threads/ct2-iai-may-2013.12678/