![]() ![]() However, intrinsic value is one of the best tools that allows you to compare investment opportunities by comparing their respective intrinsic values and I’ll do my best to explain intrinsic value in the most applicable way possible. Intrinsic value calculation key elementsĬalculating intrinsic value is not a precise method of valuing a stock but don’t worry, there isn’t any that is precise. If you are not a business graduate, words like discounted present value of cash flows might sound intimidating, but nothing to worry, we are here to explain the above and enable you to learn how to calculate the intrinsic value of any stock. Intrinsic value formula: “Discounted present value of future cash” When asked how to calculate intrinsic value, Buffett also shared his intrinsic value formula in the same speech: “Intrinsic value is the number that you get if you can predict all the cash the business can give you between now and judgement day, discounted at a proper discount rate.” In his famous 2001 Georgia University speech, Warren Buffett defined intrinsic value as: ![]() If you liked this, you might find more value adding learning materials at my FREE STOCK MARKET INVESTING COURSE. ![]()
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