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To: Chuzzlewit who wrote (21)	2/2/1999 10:00:00 AM
From: Steve Robinett	Read Replies (1) \| Respond to of 419

CTC, Okay, I'll give you your static Annuity Model for cash flow valuation as a ballpark way to value an asset but there's a problem with using 10% in a world with a 5% long treasury rate. Your hypothetical states, That's why a bank account paying out $1 per year is worth $10 regardless of whether I remove the money at the end of the year, or let it compound Since the long-term risk free rate of return these days is about 5%, an actual bank account that paid 10% would be worth more than $10. I haven't figured it out, but probably something like $12-13. Best, --Steve

To: Chuzzlewit who wrote (21)	2/2/1999 11:55:00 AM
From: Joe E.	Read Replies (2) \| Respond to of 419

Speaking of the static annuity model's utility, it occurs to me that the model must be calibrated against the values of non-internet stocks. In one post, you suggested a comparison between Disney now and AOL in the dim future, after AOL had become all grown up. This suggests to me that Disney must then be relatively easy to evaluate, using its likely future cash flows discounted to today to come up with the current stock price. With all of those analysts watching Disney, there are of course lots of forecasts of Disney's future. If a particular discount rate gives a value within 10%/15% for Disney, then that could be a reasonable rate to use. OK, Disney might be mispriced relative to its forecasts, and is less risky than the internets, and could be a special case. Ideally a basket approach is probably better, but my point is the market should reveal the market discount rate to us, rather than us picking one. What do you think the market, right now, is saying about the appropriate market discount rate?