The value of an asset or a company is the sum of all of its future cash flows discounted back to today at an appropriate discount rate.
I'm not making that up, Warren Buffett (Trades, Portfolio) told us that is how it is.
One variable in a valuation calculation is the discount rate that is used. Small changes in that discount rate create large moves in the estimation of intrinsic value.
In the lecture below Professor Damodaran helps us with how to determine what an appropriate discount rate is.
