meet_ex4


Exhibit 4: Present Value Adjusted for Uncertainty for Asset F
  Cash flow Probability Probability-
adjusted
cash flow
Discount factor 6% Present value
Year 1

Adjustment to reflect risk premium.

$8,000
$10,000
0.10
0.90
$ 800
9,000
$9,800
(1,400)
$8,400
0.943 $7,921
Year 2 $7,000
$10,000
0.15
0.85
$1,050
8,500
$9,550
0.890 $8,500
Year 3 $7,000
$10,000
0.20
0.80
$1,400
8,000
$9,400
0.840 $7,896
Year 4 $6,500
$10,000
0.23
0.77
$1,495
7,700
$9,195
0.792 $7,282
Year 5 $6,000
$10,000
0.25
0.75
$1,500
7,500
$9,000
0.747 $6,723
Year 6 $ 5,000

$10,000
0.30
0.70
$ 1,500
7,000
$ 8,500
0.705 $ 5,992
Total     $54,045   $44,314
 

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QUIZ

8 sentences to help you master subject-verb agreement

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