Splish Brothers Inc. is using a discounted cash flow model.

Scenario 1: Cash flows are fairly certain		Scenario 2: Cash flows are uncertain
$ 270/year for 5 years		75% probability that cash flows will be $ 270 in 5 years
Risk-adjusted discount rate is 8%		25% probability that cash flows will be $ 85 in 5 years
Risk-free discount rate is 3%		Risk-adjusted discount rate is 8%
		Risk-free discount rate is 3%

Identify which model Splish Brothers might use to estimate the discounted fair value under each scenario, and calculate the fair value. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.)

cenario 1:

Splish Brothers might use	expected cash flowtraditional approach model.
Fair Value	$

Scenario 2:

Splish Brothers might use	expected cash flowtraditional approach model.
Fair Value