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Windsor Enterprises is using a discounted cash flow model. Identify which model Windsor might use to estimate the discounted fair value under each scenario, and
Windsor Enterprises is using a discounted cash flow model. Identify which model Windsor might use to estimate the discounted fair value under each scenario, and calculate the fair value using the present value tables: A Scenario 1: Cash flows are fairly certain $260/year for 5 years Risk-adjusted discount rate is 6% Risk-free discount rate is 2% Scenario 1: (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.) Windsor might use Scenario 2: Cash flows are uncertain 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. Fair value 75% probability that cash flows will be $260 in 5 years 25% probability that cash flows will be $115 in 5 years Risk-adjusted discount rate is 6% $ Risk-free discount rate is 2% V model
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