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Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows are uncertain $ 250/year for
Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows are uncertain $ 250/year for 5 years 75% probability that cash flows will be $ 250 in 5 years, Risk-adjusted discount rate is 8% 25% probability that cash flows will be $ 105 in 5 years Risk-free discount rate is 2% Risk-adjusted discount rate is 8% Risk-free discount rate is 296 Identify which model Larkspur might use to estimate the discounted fair value under each scenario, and calculate the fair value. (Fom calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, eg, 511275.25.) Click here to view the factortable PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OFAN ANNUITY OF Scenario 1: Larkspur might use traditional approach model Fair Value $ Scenario 2: Larkspur might use excedad cash flow model Fair Value $ Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows are uncertain $ 250/year for 5 years 75% probability that cash flows will be $ 250 in 5 years, Risk-adjusted discount rate is 8% 25% probability that cash flows will be $ 105 in 5 years Risk-free discount rate is 2% Risk-adjusted discount rate is 8% Risk-free discount rate is 296 Identify which model Larkspur might use to estimate the discounted fair value under each scenario, and calculate the fair value. (Fom calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, eg, 511275.25.) Click here to view the factortable PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OFAN ANNUITY OF Scenario 1: Larkspur might use traditional approach model Fair Value $ Scenario 2: Larkspur might use excedad cash flow model Fair Value $
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