Shamrock Enterprises is using a discounted cash flow model. Identify which model Shamrock might use to estimate the discounted fair value under each scenario, and calculate the fair value using the present value tables:

Scenario $1$: Cash flows are fairly certain Scenario $2$: Cash flows are uncertain

$$260/$year for $5$ years $75\%$ probability that cash flows will be $$260$ in $5$ years

Risk$-$adjusted discount rate is $6\%25\%$ probability that cash flows will be $$100$ in $5$ years

Risk$-$free discount rate is $3\%$ Risk$-$adjusted discount rate is $6\%$

Risk$-$free discount rate is $3\%$

$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided. Round final answers to $2$ decimal places, e$.$g$.5,275\mathrm{.}25.)$

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF $1.$

Scenario $1$:

Shamrock might use

select a model

model.

Fair value

$enter a dollar amount rounded to $2$ decimal places

Scenario $2$:

Shamrock might use

select a model

model.

Fair value

$enter a dollar amount rounded to $2$ decimal places