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A firm is evaluating the liability to record related to a product recall. The firm uses the expected cash flow method to value the liability.
A firm is evaluating the liability to record related to a product recall. The firm uses the expected cash flow method to value the liability. The risk-free rate is 5%. The range of possible cash outflows over the next year are: Cash Probability Outflow 20% 100,000 20% 200,000 40% 300,000 20% 500,000 What is the amount the firm will record as a liability for the product recall? O $500,000 O $285,714 O $280,000 $266,667 $300,000
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