Question

If the value of sustainable investing is $171.1 and the discount rate is 8% while the value of non-sustainable investing is $15.7 and the company has a 28.7% probability of being sustainable. What is the expected value today of the company given a 18 year horizon? (Answer to 2 decimal places in $). Please make sure these two questions has absolutely correct answers!!I'll upvote once they are correct.

Answer 1

To calculate the expected value today of the company given an 18-year horizon, we calculate the present values of both sustainable and non-sustainable investments using the discount rate and probability of being sustainable, and then add them together.

Step-by-step explanation:

To calculate the expected value today of the company given an 18-year horizon, we need to consider both the value of sustainable investing and the value of non-sustainable investing.

First, we calculate the present value of the sustainable investing using the discount rate.

Present value of sustainable investing = Value of sustainable investing / (1 + discount rate)18

Next, we calculate the present value of the non-sustainable investing by multiplying the value of non-sustainable investing with the probability of being sustainable.

Present value of non-sustainable investing = Value of non-sustainable investing * Probability of being sustainable

Finally, we add the present values of both investments to get the expected value today of the company.

Expected value today = Present value of sustainable investing + Present value of non-sustainable investing