Part 2: Valuation The only result we are looking for is the price of the stock of the company that you are analysing. While finding the current market value is easy, coming up with the stock's intrinsic value is harder. You are required to use the following formula for that: DDM: P, = D,/(r-g) Unfortunately, you need to find each of the variables on the right-hand side of the equation first. Your boss tells you that how well you justify your choices is the most important part of your report and really shows the quality of your work. You can use any appropriate way to come up with reasonable D, and g, but are asked to use CAPM to identify a reasonable discount rate: r,=r,+b;(m-r,). This means that you will have to make even more appropriate assumptions now: r, b; and r . Try to link your assumptions to your qualitative analysis in Part 1. You are told that you should summarise your variable assumptions in a table: Variable Assumed value Justification D1 g Di