Marvenne must pay 1,334,025 in 2 years under a liability with no quoted price. The discount rate reflecting its own credit risk is 10%; without that risk it would be 5% (case data). Compute the fair value of the liability taking non-performance risk into account, then the effect of that risk compared with a measurement excluding own credit risk.
- Outflow to be paid
- 1,334,025
- Years before payment
- 2
- Rate with own credit risk
- 10 %
- Rate without own credit risk
- 5 %