Question
https://www.youtube.com/watch?v=HwlRMV_ZeMA Do you think that the variability of cash flows should influence the intrinsic value of a stock? Why or why not? Video: (What I
https://www.youtube.com/watch?v=HwlRMV_ZeMA
Do you think that the variability of cash flows should influence the intrinsic value of a stock? Why or why not? Video:
(What I have written so far but don't understand how this relates to stocks)
According to the video Warren Buffet states that "intrinsic value is the present value of the stream of cash that will be generated by any financial asset between now and doomsday." He made an interesting point about how in the past when looking to invest in a water or electric company, an investor can see within a narrow range how money will be spent and the return. As mentioned in the video, companies such as intel are always spending their money on new research and innovations causing difficulty with pinpointing future returns. For example if they invest in new robotic arms for the assembly of microchips and they fail to perform that cash flow from the potential future use will be no more causing a lower value of that asset.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started