What is a general approach to valuing a share of stock?

Valuing a share of stock often involves understanding the intrinsic value based on future cash flows that the company can generate. The correct approach here is to project future dividends and sum their present values as it directly relates to what shareholders can expect to receive in return on their investment.

The method of projecting future dividends reflects the notion that a stock's value is intrinsically tied to the cash flows it generates for its shareholders. By estimating future dividends, investors can better determine how much those cash flows are worth today. This involves discounting future dividends back to their present value using an appropriate discount rate, which considers the time value of money and the risk associated with the investment.

While the book value of the company, the total assets, and future earnings can provide insights into a company's value, they do not directly assess the income that stockholders will receive through dividends or cash flows. Thus, focusing on dividends and their present value is the most relevant and widely accepted method in equity valuation.