Question

What gives an asset its intrinsic value

Answer 1

Intrinsic value of an asset is the real value of the assets as opposed to what the market may believe about the value of that asset. Intrinsic value, simply put, is a measure of the future earning potential of any asset which includes the current and future expected cash flows, the growth rate of the cash flows and the estimated risks associated with achieving those cash flows.

IF an asset will not provide any cash flow in the future then its intrinsic value will be zero. One way to rationalize is to think from the perspective of a potential buyer of the asset. If an asset will not provide any cash flow, will any buyer be willing to pay any money for it? Mostly No. Hence, we can say that the intrinsic value of that asset is nil.