Asset valuation and risk Personal Finance Problem Laura Drake wishes to estimate the value of an asset expected to provide cash inflows of $2,700 for each of the next 4 years and $15,463 in 5 years. Her research indicates that she must earn 4% on low-risk assets, 6% on average-risk assets, and 16% on high-risk assets. a. Determine what is the most Laura should pay for the asset if it is classified as (1) low-risk, (2) average-risk, and (3) high-risk. b. Suppose Laura is unable to assess the risk of the asset and wants to be certain she's making a good deal. On the basis of your findings in part a, what is the most she should pay? Why? c. All else being the same, what effect does increasing risk have on the value of an asset? Explain in light of your findings in part a. a. (1) The most Laura should pay for the asset if it is classified as low-risk is $ (Round to the nearest cent.) Bond valuation Annual interest Calculate the value of the bond shown in the following table, assuming it pays interest annually. (Click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Par value $500 Coupon interest rate Years to maturity Required return 7% 12 17% The value of the bond is $ (Round to the nearest cent.)