Payal123, here i would take 10 years has Peter expects the franchise to last for 10 years so would try to spread the discount over the 10 years the time he anticipates to derive the benefit.

1st year Discount: $37,908 X 10% X 1/2 year = $1,895                  Years 2 to 9:        $37,908 X 10%         &nb sp;      = $3,790.80        &nb sp;     Year 10 discount would be the balance of $1,895.80

But we had done the present value as per 5 years. I don't have an answer why we did the present value for 5 years but we amortize the benefit over 10 years, but will come back with one :)