In the vignette, they say that sure is up 4% for the quarter, I did the following calculations: 1. 200,000 of sure * 34=6,800,000 notional. 2. Multiply that by (.04*.25) because it’s quarterly %. Now in the answer, they do not discount - what I have done in second step. I am confused by when to take the whole number and when to take the discounted value-e.g.here adjust by quarterly . Any body can provide guidance about these type of questions and how to approach them on the test?
It is quarterly cash flows and the returns are also quarterly returns, so no need to x0.25.