McDonalds - Reasonably priced but how much upside is there?

This valuation is part of this blog post:

http://blog.valuecruncher.com/2008/08/mcdonalds-reasonably-priced-but-how-much-upside-is-there/

We have assumed McDonalds revenues will grow to $25 billion in 2010 representing an annualised growth rate of 3.14% over the next three years. This growth will be driven by a combination of organic growth of existing stores and the ongoing opening of new stores.

EBITDA margins are projected to grow from 31.5% in 2008 to 33.5% in 2010 reflecting Mcdonalds’ strategy of focusing on franchised and affiliate stores. “Margins” derived from franchise operated stores for the first half of 2008 averaged 81.9% versus 17.1% for company operated stores. McDonalds re-franchised 300 stores in the first half of 2008 and plans re-franchise 1,000 to 1,500 by 2010.

We have assumed a constant capital expenditure of $2 billion per annum over the next three years consistent with McDonalds’ 2008 guidance. In 2008 this capital expenditure will be split 50/50 between the opening of 1,000 stores (net 600 stores) and reinvesting in existing stores.

A WACC (discount rate) of 8% has been used and terminal growth rate of 3% has been applied to McDonalds ongoing cash flows beyond 2010.