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Mom and Pop Groceries has just dispatched a year's supply of groceries to the government of the Central Antarctic Republic. Payment of $ 1 4
Mom and Pop Groceries has just dispatched a year's supply of groceries to the government of the Central Antarctic Republic. Payment
of $ will be made one year hence after the shipment arrives by snow train. Unfortunately, there is a good chance of a coup
dtat in which case the new government will not pay. Mom and Pop's controller therefore decides to discount the payment at
rather than at the company's cost of capital.
a Is it proper to use as the discount rate in this situation?
b How much is the $ payment really worth if the odds of coup dtat are
Note: Do not round intermediate calculations. Round your answer to decimal places.
Complete this question by entering your answers in the tabs below.
Is it proper to use as the discount rate in this situation?
Is it proper to use as the discount rate in this situation?
Required A
How much is the $ payment really worth if the odds of a coup dtat are
Note: Do not round intermediate calculations. Round your answer to decimal places.
Payment value
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