Discount rate to represent the time value of money

Reference no: EM13159541

On December 31, 2010, Pacifica, Inc., aquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred tot he owner of Seguros included 50,000 newly issued Pacifica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project goals by December 31, 2011. Pacifica estimates a 50 percent probibilty that seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money.

Reference no: EM13159541

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