Difference between revisions of "Intrinsic value"
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| − | [[Intrinsic value]] (alternatively known as [[fundamental value]]), ''P^<small>0</small>'', is the present value of a firm's expected future free cash | + | [[File:Intristic-vs-market.png|400px|thumb|right|[[Intrinsic value]] vs [[market price]]]][[Intrinsic value]] (alternatively known as [[fundamental value]]), ''P^<small>0</small>'', is the present value of a firm's expected future [[free cash flow]]s. |
==Definitions== | ==Definitions== | ||
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | ||
| − | :[[Intrinsic value]] ([[fundamental value]]), ''P^<small>0</small>''. The present value of a firm's expected future free cash | + | :[[Intrinsic value]] ([[fundamental value]]), ''P^<small>0</small>''. The present value of a firm's expected future [[free cash flow]]s. |
| + | According to [[Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition)]], | ||
| + | :[[Intrinsic value]]. An estimate of a stock's "true" value based on accurate risk and return data. The intrinsic value can be estimated, but not measured precisely. | ||
==Related concepts== | ==Related concepts== | ||
Latest revision as of 00:35, 3 November 2019
Intrinsic value (alternatively known as fundamental value), P^0, is the present value of a firm's expected future free cash flows.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Intrinsic value (fundamental value), P^0. The present value of a firm's expected future free cash flows.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Intrinsic value. An estimate of a stock's "true" value based on accurate risk and return data. The intrinsic value can be estimated, but not measured precisely.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
