Part Three-Expected Cash Flow Technique Laurel Inc. is estimating legal costs related to an environmental remediation anticipated in 10 years. Due to uncertainties related to legal services required at that time, the company prepared the following estimates. Legal Cash Outflow Probability $200,000 160,000 80,000 40,000 40% 30% 20% 10% Note: Round your answers to the nearest whole dollar. a. Compute the expected cash outflow for legal costs. $0 b. Assuming a 4% risk-free rate, determine the fair value measurement of the remediation liability using the expected cash flow technique, discounting expected cash flows using a risk-free rate. $0

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Part Three-Expected Cash Flow Technique
Laurel Inc. is estimating legal costs related to an environmental remediation anticipated in 10 years. Due to uncertainties related to legal services required at that time, the company prepared the following estimates.
Legal Cash Outflow Probability
$200,000
160,000
80,000
40,000
40%
30%
20%
10%
•Note: Round your answers to the nearest whole dollar.
a. Compute the expected cash outflow for legal costs.
$0
b. Assuming a 4% risk-free rate, determine the fair value measurement of the remediation liability using the expected cash flow technique, discounting expected cash flows using a risk-free rate.
$0
Transcribed Image Text:Part Three-Expected Cash Flow Technique Laurel Inc. is estimating legal costs related to an environmental remediation anticipated in 10 years. Due to uncertainties related to legal services required at that time, the company prepared the following estimates. Legal Cash Outflow Probability $200,000 160,000 80,000 40,000 40% 30% 20% 10% •Note: Round your answers to the nearest whole dollar. a. Compute the expected cash outflow for legal costs. $0 b. Assuming a 4% risk-free rate, determine the fair value measurement of the remediation liability using the expected cash flow technique, discounting expected cash flows using a risk-free rate. $0
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