d) Lloydminster Inc., a company that prepares financial statements using IFRS holds a 20% investment in the common shares of Clancy Shoes Ltd. The remaining 80% is owned by the Clancy family. Lloydminster Inc. uses a discounted cash flow model to determine the year-end fair of this investment based on the expected dividends over the next 6 years and the written agreement to sell the investment to the Clancy family for $500,000 at the end of year 6. There is a 20% chance that the dividends will be $50,000 each year, a 30% chance that the dividends will be $60,000 each year and a 50% chance they will be $70,000. The financial controller of Lloydminster Inc. has determined that an appropriate risk adjusted rate for this investment is 6% and the current risk free rate is 3%. i. Identify three key issues that Lloydminster Inc. must consider when valuing the investment in Clancy Shoes Ltd. ii. Calculate a fair value for the investment using the expected cash flow approach. (8 marks) 2