Marin Inc. owns 25% of the common shares of Riverbed Corp. The other 75% of the shares are owned by the Riverbed family. Marin acquired the shares eight years ago through a financing transaction. Each year, Marin has received a dividend from Riverbed. Riverbed has been in business for 60 years and continues to have strong operations and cash flows. Marin must determine the fair value of this investment at its year-end. Since there is no market on which the shares are traded, Marin must use a discounted cash flow model to determine fair value.

Marin management intends to hold the shares for 5 more years, at which time they will sell the shares to the Riverbed family under an existing agreement for $1 million. There is no uncertainty in this amount. Management expects to receive dividends of $80,500 for each of the five years, although there is a 20% chance that dividends could be $48,000 each year. The risk-free rate is 3% and the risk-adjusted rate is 5%

n period	2%	2.5%	3%	4%	5%	6%	8%	9%	10%	11%	12%	15%
1	0.98039	0.97561	0.97087	0.96156	0.95238	0.94340	0.92593	0.91743	0.90909	0.90090	0.89286	0.86957
2	0.96117	0.95181	0.94260	0.92456	0.90703	0.89000	0.85734	0.84168	0.82645	0.81162	0.79719	0.75614
3	0.94232	0.92860	0.91514	0.88900	0.86384	0.83962	0.79383	0.77218	0.75132	0.73119	0.71178	0.65752
4	0.92385	0.90595	0.88849	0.85480	0.82270	0.79209	0.73503	0.70843	0.68301	0.65873	0.63552	0.57175
5	0.90583	0.88385	0.86261	0.82193	0.78353	0.74726	0.68058	0.64993	0.62092	0.59345	0.56743	0.49718
6	0.88797	0.86230	0.83748	0.79031	0.74622	0.70496	0.63017	0.59627	0.56447	0.53464	0.50663	0.43233
7	0.87056	0.84127	0.81309	0.75992	0.71068	0.66506	0.58349	0.54703	0.51316	0.48166	0.45235	0.37594
8	0.85349	0.82075	0.78941	0.73069	0.67684	0.62741	0.54027	0.50187	0.46651	0.43393	0.40388	0.32690
9	0.83676	0.80073	0.76642	0.70259	0.64461	0.59190	0.50025	0.46043	0.42410	0.39092	0.36061	0.28426
10	0.82035	0.78120	0.74409	0.67556	0.61391	0.55839	0.46319	0.42241	0.38554	0.35218	0.32197	0.24719
11	0.80426	0.76214	0.72242	0.64958	0.58468	0.52679	0.42888	0.38753	0.35049	0.31728	0.28748	0.21494
12	0.78849	0.74356	0.70138	0.62460	0.55684	0.49697	0.39711	0.35554	0.31863	0.28584	0.25668	0.18691

Calculate the fair value of the investment using the traditional approach with Present value table