The expected cash flow approach encompasses all of the following features in determining a present value except ________.
A)the risk-free rate of return
B)a range of estimated future cash flows
C)the fair value of the asset or liability
D)the probabilities of various cash-flow outcomes

Question

Quizplus · Accepted Answer

The expected cash flow approach does take into account the risk-free rate of return, a range of estimated future cash flows, and the probabilities of various cash-flow outcomes. However, it does not explicitly consider the fair value of the asset or liability in determining the present value.

The Expected Cash Flow Approach Encompasses All of the Following