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Warren Buffett Intrinsic Value Calculator

The value of a company or any stock, products etc., that is calculated base on the analysis of the financial statements without considering the market rate is termed as the intrinsic value. Warren Edward Buffett, an American business magnate and investor has published some facts on the intrinsic value. According to him, intrinsic value can be calculated with the formula (1-(1 / (discount+1)year))) / discount+(CBV*((percentage change+1)/100)year) / (discount+1)year.

The value of a company or any stock, products etc., that is calculated base on the analysis of the financial statements without considering the market rate is termed as the intrinsic value. Warren Edward Buffett, an American business magnate and investor has published some facts on the intrinsic value. According to him, intrinsic value can be calculated with the formula (1-(1 / (discount+1)year))) / discount+(CBV*((percentage change+1)/100)year) / (discount+1)year.

Formula:

Warren Buffett Intrinsic Value =C * ( 1 - ( 1 / ( Discount / 100 + 1 )year ) ) / ( Discount / 100 ) + CBV * ( Percentage Change + 1) year / ( Discount / 100 + 1 )year Where, C= Cash taken out of Buisness Percentage Change = Average Percent Change in book value per year / 100 CBV = Current Book Value

Example

For a company having average 3 % change in book value per year, CBV is 2000, cash taken out of business is 1000 and discount rate is 5 %, then find the intrinsic value for 10 years

= 1000 * ( 1 - ( 1 / ( 5 / 100 + 1 )10 ) ) / (5 / 100 ) + 2000 * ( (3/100) + 1) 10 / ( 5 / 100 + 1 )10
= 9371.8311 \$