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Mom and Pop Groceries has just dispatched a year's supply of groceries to the government of the Centrel Antattic Repuclic Fayment of $160,000 will be
Mom and Pop Groceries has just dispatched a year's supply of groceries to the government of the Centrel Antattic Repuclic Fayment of $160,000 will be made one year hence after the shipment artives by stow train. Unfortunately, thete is a good chance of a cove dietat in which case the new government will not pay. Mom and Pop's controler therefore decides to discount the papment at 40 in. rather than at the company's 12% cost of eapital. a. Is it proper to use 40% as the discount rate in this situation? Yes b. How much is the $160,000 payment realy worth if the odds of a coup detat are 20 ph (Do net reund intermediate calculaticns. Round your answer to 2 decimal places.)
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