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John and Jane were doing a discounted after tax cash flow analysis of various insurance options. They asked management for various factors to use, and

John and Jane were doing a discounted after tax cash flow analysis of various insurance options. They asked management for various factors to use, and were provided the following:

a. Discount rate 7%.

b. Effective tax rate 22%.

c. Cost of letter of credit 75bps (basis points)

John and Jane perform their ATNPV and show it to the Risk Manager and CFO. Was there a flaw in their calculation?

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