Under the expected cash flow approach,
A) the model is best used where the element being measured does not have variable cash flows.
B) the projected cash flows reflect the certainty in terms of amount and timing.
C) the discount rate is adjusted to accommodate the riskiness of the cash flows.
D) the cash flow uncertainty is dealt with by using probabilities.

Question

Quizplus · Accepted Answer

The expected cash flow approach deals with cash flow uncertainty by assigning probabilities to different cash flow scenarios, allowing for a more accurate reflection of potential outcomes.

Under the Expected Cash Flow Approach