Final answer:
The value of asset A is determined through discounted cash flows, considering a 15% discount rate (risk). The present value of all future cash flows adds up to a total of $51.3 million.
Step-by-step explanation:
The value of asset A can be determined through a process known as discounted cash flows (DCF), if we assume that the risk mentioned in the question is related to the asset's discount rate. The formula for DCF is:
Present Value (PV) = Future Value received / (1 + Interest rate)^numbers of years t
Given the information, we calculate the present values (PV) of the cash flows:
Add up all the PVs to get the total value of the asset:
$51.3 million
This assumes that all the cash flows are received exactly at the end of each period and that the discount rate, signifying risk, remains constant at 15%.