You will use the three-stage DDM with a linearly declining growth rate in stage 2 to compute the intrinsic value of

Walt Disney stock by employing the following information:

Earning Per Share FY1 = 7.188 Bond Rate = 2.970%

Earning Per Share FY2 = 7.767 Country premium = rm - rf = 7.240 %

Earning Per Share FY3 = 8.484 Beta

Dividends Per Share = 1.690 Risk premium= Beta * (rm - rf) =

Growth Years = 7.000 Payout during Growth yrs = 23.511%

Transitional Years = 10.000 Payout at Maturity = 45.000%

Long-Term Growth Rate = 10.200% Growth Rate at Maturity =

Closing price on May 11th = 102.070

You are expected to examine the following underlying assumptions of the DDM model provided by Bloomberg:

1. The short and long-term growth rate
2. Long-term payout ratio
3. The usage of the three-stage model versus the one and two stage models
4. The number of years in the growth and transition stages