Quick Finance Tip - Intrinsic Value
Intrinsic Value is the Present Value of all future cash flow projections.
A company’s intrinsic value can only be estimated because it is impossible to predict the amount and timing of future cash flows.
To think of intrinsic value, we can use a Warren Buffet ideology. For instance, if we wanted to find the true intrinsic value of an MBA, only on the basis on earnings, the discounted value of the excess from estimated Earnings with an MBA minus estimated earnings without an MBA will get you the intrinsic value.
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