[Evan]

DesertCat,

Your example of an investment where all the cashflows come in one year is a very specific one and my first instinct, without working it out, is that it leads to a different conclusion than real life. If instead of all the cashflow coming in year 5, it instead came every year but lets say investors could only invest for 5 years at a time, then its worth the same at any point. Even if you extend the life of the business into perpetuity, if we're still assuming constant cash flows of 1 every year, it's worth the same whenever you buy it.

When you start adding growth and adjusting for real instead of nominal dollars you may be right, but I don't think your example shows it very clearly. I'll definitely think about it.