If you know the present value of a future cash flow, you can determine what a good purchase price should be for that investment. You would not want to pay more than its present value, and would like to pay less than its present value. If you know the key variables, you can use them in a meaningful risk assessment and in negotiations with other parties (buyers, sellers, lenders, investors, landlords, tenants). However, this is where uncertainty enters the picture. Reasonable people will disagree on the projected income from an asset, the projected expenses required.
