The "intrinsic value" of a stock or bond is essentially the present value of all the dividends or interest payments it will pay out in the future. If the calculated PV is higher than the current market price, the investment is considered undervalued. Conclusion
The relationship between these variables is expressed through two fundamental formulas: Present Value: Foundations and Applications of the Time Value ...
Foundations and Applications of the Time Value of Money (TVM) The "intrinsic value" of a stock or bond