The present value of the cash flows that come from an investment is the minimum price an investor should be willing to pay for the investment.

Question

Quizplus · Accepted Answer

The present value of the cash flows from an investment represents the maximum price an investor should theoretically be willing to pay for it, not the minimum. This value reflects the current worth of future cash flows, assuming a specific discount rate.

The Present Value of the Cash Flows That Come from an Investment