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    Question

    The economic value of a bank can be viewed as the sum

    of present values of the bankā€™s expected ________
    A cash inflows Correct Answer Incorrect Answer
    B cash outflows Correct Answer Incorrect Answer
    C net cash inflows Correct Answer Incorrect Answer
    D net profits Correct Answer Incorrect Answer
    E net gross profit Correct Answer Incorrect Answer

    Solution

    The economic value isĀ a cash flow calculation that takes the present value of all asset cash flows and subtracts the present value of all liability cash flows. As such, the economic value will be reflected by the sum of present value of the expected net cash inflows.

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