Hey all,

I have a question about reading 36 EOC question 15 (page 409).

The question states that the premium over book value will be 20 percent in 5 years’ time. I would have assumed that one should calculate the book value after 5 years and multiply it by 1.20, however the solution multiplies the ending book value by 0.2 instead.

have I missed something, or is the worked solution incorrect?