The process of valuing an investment by determining the present value of its future cash flows is called (the):
A) Constant dividend growth model.
B) Discounted cash flow valuation.
C) Average accounting valuation.
D) Expected earnings model.
E) Capital Asset Pricing Model.

Question

Quizplus · Accepted Answer

Discounted cash flow valuation is the correct answer because it involves calculating the present value of an investment's expected future cash flows to determine its value. This method is widely used in finance for valuing companies, investments, and assets by applying a discount rate to the future cash flows.

The Process of Valuing an Investment by Determining the Present