I’m confused about how they discounted the continuing value RI. I calced the two periods correctly at .70 and .74 and discounted them back to the present to using an r=8% getting .65 and .63. Then I got a continous value of 15.24 using g=.03 .76/(.08-.03). In the answer it looks like they discount it by 1.08^2. The line says 1.28+ PV (8%,2)* [15.24] but wouldn’t it get discounted back by 1.08^3 and what does PV (8%,2) mean?

another way to look at it year 1 .70 year 2 .74 + ((1.03*.74)/(.08-.03)) which equals 15.98 So it should be NPV Year 1 .7 Year 2 15.98 I *% NPV =14.35 + Current BV of $5 gives you $19.35

^^ That’s what I did…haven’t looked at the explanation

Thanks.