what is the intrinsic value of a stock 
fair value is the price an investor pays for a stock and may be considered the present value of the stock when the stock s intrinsic value is considered and the stock s growth potential the intrinsic value is calculated by dividing the value of the next year s dividend by the rate of return minus the growth rate p d1r gwhere p current stock priced1 value of next year s dividendg constant growth rate expectedr required rate of return begin aligned p frac d1 r g textbf where p text current stock price d1 text value of next year s dividend g text constant growth rate expected r text required rate of return end aligned p rd1 gwhere p current stock priced1 value of next year s dividendg constant growth rate expectedr required rate of return 