G'day old fella Riidge,Thanks for your comments. I shall absorb...

G'day old fella Riidge,

Thanks for your comments. I shall absorb them.

One of the things that I am very concious of is to not introduce an artificial level of accuracy. Hence some of the "generalisations"

I had thought of doing just as you said. ie allow for a series of sales projections with percentage probabilities. However, in the end I decided not to. It starts to become very subjective.

I maintain that, in my terms, the Discount Rate should be the bond rate (though you may argue that the bond rate could vary over the next ten years, I guess). To me the aim of the DCF valuation is to present the company as a comparison to another investment (opprotunity cost). In other words, the spreadsheet says that $8.33 invested in a ten year bond at 5% would give you the same "value" as buying a CST share now (at current price). Of course, assuming all other figures are correct. So, you could say that we are buying $8.33 for $2.50. I see the risk as being covered by this, rather than by arbitrarily setting a higher Discount Rate.