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Technology Stocks : Network Appliance

NTAP 109.43

-0.2%

Nov 14 9:30 AM EST

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To: tinkershaw who wrote (5097)	11/17/2000 10:20:05 AM
From: broken_cookie	Read Replies (1) of 10934

Tinkershaw, Choosing a discount rate is always difficult. One thing about NTAP that is unusual for such a "high flying stock" is its beta of .8. A beta usually more commensurate with more of a blue chip stock. I got the beta off of my MSN portfolio. Perhaps this beta is in error, but if not, the low beta is the only unusual factor in deriving the 16% WACC. Because in all actuality, when I did the calculation, the WACC I came up with was 13.6%; I considered this to be too low. So I used my judgment and moved it up to 16%. No way is NTAP's beta equal to .8. That would mean that NTAP is 20% less volatile than the overall market.

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