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Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows are uncertain $ 110/year for 5 years 75% probability that cash flows will be
Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows are uncertain $ 110/year for 5 years 75% probability that cash flows will be $ 110 in 5 years Risk-adjusted discount rate is 7% 25% probability that cash flows will be $ 110 in 5 years Risk-free discount rate is 4% Risk-adjusted discount rate is 7% Risk-free discount rate is 4% Identify which model Marin might use to estimate the discounted fair value under each scenario, and calculate the fair value. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, eg,5,275.25.) Click here to view the factortable PRESENT VALUE OF 1 Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Scenario 1: Marin might use V traditional approach model Fair Value S 63143 Scenario 2: Marinimight use expected as how model D Fair value 9 9042
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