May 2013 IAI Que 16 Discount factor

Discussion in 'CT2' started by Rajat gupta, Mar 9, 2017.

  1. Rajat gupta

    Rajat gupta Ton up Member

    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
     
  2. Simon James

    Simon James ActEd Tutor Staff Member

    Rajat gupta likes this.
  3. Rajat gupta

    Rajat gupta Ton up Member

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