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Estimate the discounted fair value under each scenario

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Reference no: EM132784887

Question - Skysong, Inc. is using a discounted cash flow model.

Scenario 1: Cash flows are fairly certainScenario 2: Cash flows are uncertain$180/year for 5 years75% probability that cash flows will be $180 in 5 years

Risk-adjusted discount rate is 6%25% probability that cash flows will be $95 in 5 years

Risk-free discount rate is 4%Risk-adjusted discount rate is 6%

Risk-free discount rate is 4%

Identify which model Skysong might use to estimate the discounted fair value under each scenario, and calculate the fair value.

Reference no: EM132784887

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