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Davis Company is formed with $8,000 in equity and is expected to generate the following cash flows (all occurring at the end of one
Davis Company is formed with $8,000 in equity and is expected to generate the following cash flows (all occurring at the end of one year): Cash Flows $19,000 37,000 61,000 Probability 0.20 0.15 0.65 Determine if the equity is high enough to absorb expected losses assuming the appropriate discount rate is 4%. Show your work to receive credit.
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