Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows a

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Larkspur Inc Is Using A Discounted Cash Flow Model Scenario 1 Cash Flows Are Fairly Certain Scenario 2 Cash Flows A 1 (101.96 KiB) Viewed 45 times

Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain Scenario 2: Cash flows are uncertain $250/year for 5 years 75% probability that cash flows will be $250 in 5 years Risk-adjusted discount rate is 8% 25% probability that cash flows will be $105 in 5 years Risk-free discount rate is 2% Risk-adjusted discount rate is 8% Risk-free discount rate is 2% Identify which model Larkspur 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 factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Scenario 1: Larkspur might use model. Fair Value $ Scenario 2: Larkspur might use V model. Fair Value $