Well, the highest (so most conservative) yet (hopefully) risk-free interest rate out there is the dreaded Long Bond. Call that rate R.
NPV of a stream of $1 payments that will arrive in your mailbox at 1-year intervals is
NPV = $1 [now] + $1*(1-R) [y/e 2004] + etc.
The future payments are worth less than the immediate payment, because you could take your $1 now, put it in bonds, and get R. From there it's an algebra trick to show that NPV = 1/R.
I'm a former techie so I'll grind it out for exercise ... please skip the following if
you value your time
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We know that
NPV = 1 + (1-R) + (1-R)^2 + (1-R)^3 + ... (A)
so we can multiply by (1-R) on both sides:
NPV*(1-R) = (1-R) + (1-R)^2 + (1-R)^3 + ...
add one to both sides:
NPV*(1-R) + 1 = 1 + (1-R) + (1-R)^2 + (1-R)^3 + ...
But the right-hand side of the last expression is just the same as our formula (A) for NPV above. So we can set
NPV = NPV*(1-R) + 1
Then we solve for NPV:
NPV*(1-(1-R))=1
NPV*(R) = 1
NPV = 1/R.
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Finally, Buffett warns people to be real careful when quantifying the future cash flows themselves, for several reasons. Graham has much more to say about that in "The Intelligent Investor."