Google’s market value is very close to the predicted valuation determined in this report.  Google’s valuation is determined by their projected free cash flows, which are expected to be positive for the next 20 years.  These free cash flows are displayed in Exhibit 13 , starting at $2.373 billion in 2007, and ending at $50.264 billion in 20 years.  The projected free cash flows for 2026 are used for the continuing free cash flows value in the calculation Google’s valuation.  Exhibit 14 shows that Google’s stock should be valued at $502.32, according to the present value of free cash flows.  As of June 12th, 2007, Google’s stock closed at $504.77, which shows that the market has overvalued their stock by $1.45, which is less than 0.3% of its current price.  This shows that although Google has potential growth for the future, its market price of slightly over $500 accurately reflects the value of the company.   This exhibit also shows the assumptions used to value Google’s shares.  Google’s beta was calculated using weekly returns, starting the week of their IPO on August 19th, 2004, and ending on June 8, 2007.  These returns were compared to the S&P 500’s returns, resulting in an unadjusted beta of 1.293, with a standard error of 0.290.  Although the standard error of Google’s beta is slightly high because it only went public three years ago, the industry beta, which is the average of Microsoft and Yahoo’s adjusted betas, is only slightly higher than Google’s adjusted beta of 1.20.  Because the two beta values are so close, and despite the high standard error, this report assumes a beta value of 1.20 for Google.  This beta, paired with a risk free rate of 5.24%, the current t-bill rate, and a market risk premium of 7%, results in a CAPM required rate of return of 13.61%.  The CAPM rate is input into the weighted average cost of capital equation, and because Google has no debt, the weighted average cost of capital is equivalent to the CAPM value of 13.61%.  As a result, the present value of free cash flows discounted at the weighted average cost of capital is $109.075 billion for the next 20 years, while the present value of continuing free cash flows amounts to $47.734 billion.  These present values result in a common equity value of $156.809 billion, which, when divided by the 311.55 million shares outstanding results in a value per share of $503.32.  Crystal Ball analysis of Google’s stock price, Exhibit 15, shows that their share price may vary greatly.  The minimum value of the share price was $89.35, while the maximum was $33,495.01 per share.  Also, the mean price in 5000 trials was $719.65, while the median share price was $476.85.  Exhibit 16 shows the assumptions and the associated standard deviation used for this Crystal Ball analysis.  Due to the high uncertainty of Google’s future, a significant standard deviation of two was used for lambda, the number of years until supernatural growth ceases.  Overall, Google’s share price is currently appropriately valued, only $1.45 overvalued as compared to the valuation from this analysis.