What factors determine the value of an economic asset? The expected size, timing and risk of...
What factors determine the value of an economic asset?
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The expected size, timing and risk of cash flows along with an assessment of the ability of the firm to minimize expenses. |
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The expected size, timing and risk of cash flows. |
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The expected size, timing and risk of cash flows along with an assessment of the ability of the firm to maximize income. |
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The expected size, timing and risk of cash flows along with an assessment of the ability of the firm to maximize market share. |
Homework Answers
The expected size, timing and risk of cash flows.
The value of an asset depends upon the present value of cash flows associated with it. Hence the cash flows are discounted as per the required rate taking into account the risk factor. The timing of cash flows determines the present value.
The value of the asset is not related to the firms ability to increase revenue and minimize costs, neither to share price. Hence other options are incorrect.
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