Answer:
The value of any asset is the sum of the present values of all future cash flows it is expected to provide over the relevant time period
Explanation:
When valuing an asset, an investor should
1. First forecast the cash flows that he is likely to receive in each period during during the investment horizon.
2. Discount each of the periodic cash-flows at the relevant periodic required rate of return - i.e calculate the present value for each cash-flow
3. Sum the present values calculated in step 2. This total is the value of the asset.
