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Questions
FINA2720.MERGED.202610 Final Exam- Requires Respondus LockDown Browser
Short answer
If the value of sustainable investing is $136.5 and the discount rate is 5.6% while the value of non-sustainable investing is $28.7 and the company has a 43.8% probability of being sustainable. What is the expected value today of the company given a 5 year horizon? (Answer to 2 decimal places in $).
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Approach Analysis
The question provides the following values: sustainable investment value (V_u) = 136.5, non-sustainable investment value (V_d) = 28.7, probability of being sustainable p = 0.438, discount rate r = 5.6% (0.056), and a 5-year horizon T = 5.
First, determine the expected value at the 5-year horizon ......Login to view full explanationLog in for full answers
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