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This is the amount of future cash flows from the share, not discounted. To get the current value of the share, these future cash flows need to be discounted at the required rate of return.
This is approximately the discounted value of the expected selling price of the share only. We also need to include the discounted value of the future dividend payments as well.
The intrinsic value of the share may be determined by taking the present value of the future cash flows (dividends and future sales price). This present value is calculated using the required rate of return, which here is 10%. The dividends are expected to be $2.00, $2.10 and $2.25 for each of the next three years and then the share will be sold for $25. The present value calculation (using the Present Value of $1 table in the Present/Future Value tables on the Tools menu), is: ($2.00 × .909) + ($2.10 × .826) + ($2.25 × .751) + ($25.00 × .751) = $1.818 + $1.735 + $1.690 + $18.775 = $24.02
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An investor is considering buying Monosone, Inc.'s common stock on January 1, year 2 and anticipates, with reasonable assurance, selling it December 31, year 4 at $25.00 per share. What is the approximate intrinsic value on January 1, year 2 of each share (rounded to the nearest dollar) when the required rate of return is 10%?