Which of the following are key inputs to determining the intrinsic value of an asset?
I. the required rate of return
II. future cash flows
III. current stock price
IV. timing of future cash flows
A) I and II only
B) I and III only
C) I, II and IV only
D) II, III and IV only

Question

Quizplus · Accepted Answer

The intrinsic value of an asset is determined by estimating future cash flows, the timing of these cash flows, and discounting them back to the present using the required rate of return. The current stock price is not a direct input in calculating intrinsic value; rather, it is what is often compared against the calculated intrinsic value to make investment decisions.

Which of the Following Are Key Inputs to Determining the Intrinsic