If the residual income is expected to drop to zero "after five yyears " or, one should calculate the PV in the fifth year of the continuing residual incomes sixth year onwards, right?
Schweser has this example where they calculate PV of fifth year RI, at 4th year end! (After stating the the question “after five years RI falls to zero” what am I missing?!
Jolie, if I’m understanding your question correctly:
Terminal value at 5 = RI at 6/(r-g). Since RI at 6 = zero, there is no value for TV at 5, so your RI at 5 is the final cash flow discounted back to find the value today. Hope this helps. If I’m not answering what you are having trouble with, could you better articulate what your question is, I had trouble making sense of your two posts.
Thanks a lot 
Study session 11. BB Ex.9. Why are we calculating the terminal value here just by discounting it with r? Since RI will immediately drop to zero, the persistence factor in denominator will be 0, so we are left with 1+r to discount it with, not just r!