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Considering the uncertainty associated with the discount rate may be important. a. How (A or B) would you compute the discount factor DF (100) for

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Considering the uncertainty associated with the discount rate may be important. a. How (A or B) would you compute the discount factor DF (100) for t=100, if you expect a discount rate of 1% (d=0.01) with a probability of 0.5 and a discount rate of 6% (d=0.06) with a probability of 0.5 A) DF(100) = 0.5.e-0.01100 +0.5.e-0.06.100 = 0.18518 B) DF(100) = e(0.5 -0.01+0.5 -0.06).100 = 0.03019 b. Which consequence does a proper consideration of such uncertainty have for the discount rate? Considering the uncertainty associated with the discount rate may be important. a. How (A or B) would you compute the discount factor DF (100) for t=100, if you expect a discount rate of 1% (d=0.01) with a probability of 0.5 and a discount rate of 6% (d=0.06) with a probability of 0.5 A) DF(100) = 0.5.e-0.01100 +0.5.e-0.06.100 = 0.18518 B) DF(100) = e(0.5 -0.01+0.5 -0.06).100 = 0.03019 b. Which consequence does a proper consideration of such uncertainty have for the discount rate

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