You believe that a certain asset, like a business or shop, is going to be worth $100 million in five years. If the interest rate is 5%, then that asset will be worth $75 million today.

Question

Quizplus · Accepted Answer

This statement is incorrect. The present value of the asset would be higher than $75 million if it is expected to be worth $100 million in the future. The present value can be calculated using the discounted cash flow (DCF) method, taking into account the time value of money and expected future cash flows.

You Believe That a Certain Asset, Like a Business or Shop