Apple should reach $1000 dollars in the next 3-5 years because:

1. It’s free cash flow growth rate tends to be well above 25%. And free cash flow is a good measure of valuation.

2. With low interest rates one discounts all these future cash flows to today’s value (because $1 in a year is worth 90c today at a 10% discount) at say an 11% discount rate to get what it’s all worth today. 11% is another way of saying what return you would want if investing in stock market in the present climate.

3. Reality check. If the discount rate is 16%, then the company is already at fair value.