Windsor Enterprises is using a discounted cash flow model. Identify which model Windsor might use to estimate the discounted fair value under each scenario, and calculate the fair value using the present value tables:

Scenario 1: Cash flows are fairly certain		Scenario 2: Cash flows are uncertain
$260/year for 5 years		75% probability that cash flows will be $260 in 5 years
Risk-adjusted discount rate is 6%		25% probability that cash flows will be $115 in 5 years
Risk-free discount rate is 2%		Risk-adjusted discount rate is 6%
		Risk-free discount rate is 2%

Scenario 1:

Windsor might use

Scenario 2:

Windsor might use	select a model expected cash flowtraditional approach model.
Fair value