2. That
definition by itself opens up a Pandora’s box, as estimating
how much cash the business can generate during its remaining lifetime can be
baffling alone.
3. If
you manage to do that, despite its problems, then there is the grey area of
using discounting – what rate to use?
4. At
best, intrinsic value is an estimate, rather than a precise figure, and it is
additionally an estimate that must be changed if interest rates move or
forecasts of future cash flows are revised.
5. A
lesser understood concept is that the intrinsic value can sometimes be much
lower than the company’s stated book value, and we have no system for estimating the correct value of all businesses.