Intrinsic value

I have a confusion about understanding the question:

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Could anyone explain to me why we are excluding just paid ¥450?

The intrinsic value of a share is the present value of expected future dividends (based on DDM), not historical dividends.


To add to Fino, you don’t count historical cash flows because the person buying the security will not get those cash flows. Think about if someone told you that a stock paid 1M last year but will have no more cash flows going forward. Would you, a potential buyer pay money for that? It would be worth $0 because the the expected/future cash flows are $0.

So to the above points you value a security based on FUTURE cash flows

Good analogy, thanks!


This formula is a mystery to me too