Dividend discount model


For Walt Disney Company Find an estimate of beta for your company. You might consider examining/using an industry average beta, especially if the reported beta you find seems unrealistic or inappropriate. Note: You should probably check your beta across a few different sources, because sometimes they vary. Find the current interest rate (yield) for 3-month Treasury bills. Determine an appropriate market risk premium. Be sure to consider the size of your firm when estimating an appropriate premium. After making your calculations:

  • Using all this information, what is the expected return for your company using CAPM?
  • You estimated a required rate of return using the dividend discount model. How does your CAPM number compare?

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Finance Basics: Dividend discount model
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