QUESTION 22 The valuation process can be described as ______. calculating the pr
ID: 2753354 • Letter: Q
Question
QUESTION 22
The valuation process can be described as ______.
calculating the present value of an expected future cash flow using the investor's required rate of return as the discount rate
calculating the future value of an expected future cash flow using the investor's required rate of return as the discount rate
amortizing the value of the asset over its holding period
a.calculating the present value of an expected future cash flow using the investor's required rate of return as the discount rate
b.calculating the future value of an expected future cash flow using the investor's required rate of return as the discount rate
c.amortizing the value of the asset over its holding period
Explanation / Answer
Answer a Calculating the present value of expected future cash flow using the investor required rate of return as the discount rate. Since present value of future cash flow need to be compared with the present value of the cash outflow , and based on which decision for investment will be taken.
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