Shamrock, Inc. is using a discounted cash flow model.

Scenario 1: Cash flows are fairly certain		Scenario 2: Cash flows are uncertain
$170/year for 5 years		75% probability that cash flows will be $170 in 5 years
The risk-adjusted discount rate is 7%		25% probability that cash flows will be $110 in 5 years
The risk-free discount rate is 2%		The risk-adjusted discount rate is 7%
		The risk-free discount rate is 2%

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

Scenario 1:

Shamrock might use	a.) expected cash flow b.) traditional approach model.
Fair Value	$

Scenario 2:

Shamrock might use	a.) expected cash flow b.) traditional approach model.
Fair Value	$