The value of any asset

Question

Quizplus · Accepted Answer

The value of an asset is determined by the present value of future benefits that the asset is expected to provide its owner. This reflects the fact that an asset's value is based on its expected future cash flows, and the present value concept adjusts for the time value of money. Choice A is incorrect because an asset's value is not determined solely by its past benefits, but by the future benefits it is expected to provide. Choice B is incorrect because an asset's value is based on the expected future benefits, not just those that will occur in the current year. Choice D is incorrect because one of the above answers correctly describes the determination of an asset's value.

The Value of Any Asset