• Is a higher rate of return on investment always better? Not always, for two reasons. First, a lower-but-safer return can be better than a higher-but-riskier return. Second, an investment with a higher percentage return can generate less value than a lower-return investment that is larger or lasts longer. In Chapter 2, we show how to calculate the present value (PV) of the stream of cash flows from an investment. Present value is a workhorse concept of corporate finance that shows up in almost every chapter.