Value is the only concern for any economic commitment. To calculate your expected return, compute the discounted present value of the flow of all cash from the business between now and judgment day. To do so, you must A) determine the amounts and certainty of cash flows in and out and B) select a discount rate. Buffett noted that growth can enhance or detract from the calculated value. For example, electric utilities were forced to grow and to invest capital in the 1970s, which lowered their returns.
