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 information in the picture below:

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

Earning Per Share FY1 Earning Per Share FY2 Earning Per Share FY3 Dividends Per Share Growth Years = 7.188 = 7.767 = 8.484 = 1.690 = 7.000 Transitional Years Long-Term Growth Rate = 10.200% Closing price on May 11th = 102.070 = 10.000 Bond Rate Country premium = rm -rf Beta Risk premium Beta * (rm -rf) Payout during Growth yrs Payout at Maturity Growth Rate at Maturity = 2.970% = 7.240 % = 23.511% = 45.000%