Additional Background Information of Wal-Mart in 2005:
* Sales Revenue:
In 2005, Wal-Mart had $312.4 billion in sales, more than 6,200 facilities around the world—including 3,800 stores in the United States and 2,800 elsewhere, employing more than 1.6 million "associates" worldwide.
* Other Innovations:
Later in October Wal-Mart announced it would implement several environmental measures to increase energy efficiency. The primary goals included spending $500 million a year to increase fuel efficiency in Wal-Mart’s truck fleet by 25% over three years and double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at stores by 30%.
* Board Affairs:
Tom Coughlin (Vice Chairman) left in December 2005 after pleading guilty to wire fraud and tax evasion for stealing hundreds of thousands of dollars from Wal-Mart. 
1. DIVIDEND DISCOUNT MODEL
The constant growth DDM stated that the current value of a firm’s stock price was equal to next year’s expected dividend divided by the investor’s required rate of return minus the expected dividend growth rate. And the required return could be decomposed into two parts: the expected dividend plus the expected future growth in dividends. That is the stock price equals dividend divided by the indicated dividend yield.
And Wal-Mart has an indicated dividend yield of 1.2 percent. 
Based on this model, the PV of stock price of 2006 should be dividend $0.64/1.2%=$53.33, higher than the recent closing price of $49.47. It reaches a conclusion that we’d better buy the Wal-Mart stocks.
2. CAPITAL ASSET PRICING MODEL
We use CAPM to calculate the appropriate expected rate of return. Information related to the estimation of Wal-Mart’s beta is presented 0.84.  The historical U.S. market risk premium was estimated to be 5.05 percent and the current long-term (10-year) government bond yield was 4.40 percent. The estimation of...