Years 2005 2006 2007 2008 2009 2010 2011

Estimated P/E 18.00 17.50 17.00 16.50 16.00 16.00 15.50

Expected Earnings 2005 –

We forecasted expected earnings for 2005 at 2.01 as described in our dividend discount

model analysis below.

Conclusion

Based on MCD’s expected PE ratio and earnings for 2005 we estimate the company’s

target price in 2005 at: Target price: 2.01 x 18 = $36.18. Based on this valuation the

company is significantly undervalued and we can achieve a return of 27% in 2005.

In addition this value is close but still lower than the S&P 12 month target price of $38

and very close to the analysts median target of $36.

PRICE TARGET SUMMARY

Mean Target: 35.58

Median Target: 36.00

High Target: 38.00

Low Target: 32.00

No. of Brokers: 12

Data provided by Thomson/First Call

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