[buffett]

I follow (and agree with) the framework but not the details. It seems like you might be double-counting some "risk," since the 10-year treasuries are yielding 4.5% but you're starting from a base of 6.0%.

Also, I don't get where the 9% comes from and why it is the "lowest."

For comparison purposes: the Longleaf folks discount at inflation+10%, Mr. Buffett has been using ~10% post-tax/~13% pre-tax as his floor discount rate in the current low-rate environment, and CAPM would say to use 4.5% plus some multiple of "risk premium" which I guess would work out to around 11% or so. So the 15%/12% thing to me seems excessive; to show others who may be following along how wide the swings of DCF can be...if you bring those down to 10%, the intrinsic value goes to $74 per share.