Solution a$.$ Determine what is the most Laura should pay for the asset if it is classified as $(1)$ low$-$risk, $(2)$ average$-$risk, and $(3)$ high$-$risk. Low Risk$$ Avg. Risk High Risk$$ Discount Rates $4\%7\%14\%$ # of Years Cash Flows $1$ $$3,000$$$2,884\mathrm{.}62$ $$2,803\mathrm{.}74$ $$2,631\mathrm{.}5823,000$$$2,773\mathrm{.}67$ $$2,620\mathrm{.}32$ $$2,308\mathrm{.}4033,000$$$2,666\mathrm{.}99$ $$2,448\mathrm{.}89$ $$2,024\mathrm{.}9143,000$$$2,564\mathrm{.}41$ $$2,288\mathrm{.}69$ $$1,776\mathrm{.}24515,000$$$12,328\mathrm{.}91$ $$10,694\mathrm{.}79$ $$7,790\mathrm{.}53$ Present Value $$$$23,218\mathrm{.}60$ $$20,856\mathrm{.}43$ $$16,531\mathrm{.}66$ b$.$ Suppose that Laura is unable to assess the risk of the asset and wants to be certain she$$s making a good deal. On the basis of your findings in part a$,$ what is the most she should pay? Why?