Estimating Share Value Using the DCF Model Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016 Reported Horizon Period Terminal $ millions 2016 2017 2018 2019 2020 Period Sales $74,673 $76,166 $77,689 $79,243 $80,828 $81,636 NOPAT 3,360 3,427 3,496 3,566 3,637 3,674 NOA 22,402 22,850 23,307 23,773 24,248 24,491 Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million. Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016. Instructions: Round all answers to the nearest whole number, except for discount factors and stock price per share. Round discount factors to 5 decimal places. Round stock price per share to two decimal places. Do not use negative signs with any of your answers. Reported Forecast Horizon Terminal ($ millions) 2016 2017 2018 2019 2020 Period Increase in NOA Answer Answer Answer Answer Answer FCFF (NOPAT - Increase in NOA) Answer Answer Answer Answer Answer Discount factor [1/(1+rw)t] Answer Answer Answer Answer Present value of horizon FCFF Answer Answer Answer Answer Cum. present value of horizon FCFF Answer Present value of terminal FCFF Answer Total firm value Answer NNO Answer Firm equity value Answer Shares outstanding (millions) Answer Stock price per share Answer
Estimating Share Value Using the DCF Model Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016 Reported Horizon Period Terminal $ millions 2016 2017 2018 2019 2020 Period Sales $74,673 $76,166 $77,689 $79,243 $80,828 $81,636 NOPAT 3,360 3,427 3,496 3,566 3,637 3,674 NOA 22,402 22,850 23,307 23,773 24,248 24,491 Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million. Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016. Instructions: Round all answers to the nearest whole number, except for discount factors and stock price per share. Round discount factors to 5 decimal places. Round stock price per share to two decimal places. Do not use negative signs with any of your answers. Reported Forecast Horizon Terminal ($ millions) 2016 2017 2018 2019 2020 Period Increase in NOA Answer Answer Answer Answer Answer FCFF (NOPAT - Increase in NOA) Answer Answer Answer Answer Answer Discount factor [1/(1+rw)t] Answer Answer Answer Answer Present value of horizon FCFF Answer Answer Answer Answer Cum. present value of horizon FCFF Answer Present value of terminal FCFF Answer Total firm value Answer NNO Answer Firm equity value Answer Shares outstanding (millions) Answer Stock price per share Answer
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Estimating Share Value Using the DCF Model
Following are forecasts of Target Corporation's sales,
| Reported | Horizon Period | Terminal | ||||
|---|---|---|---|---|---|---|
| $ millions | 2016 | 2017 | 2018 | 2019 | 2020 | Period |
| Sales | $74,673 | $76,166 | $77,689 | $79,243 | $80,828 | $81,636 |
| NOPAT | 3,360 | 3,427 | 3,496 | 3,566 | 3,637 | 3,674 |
| NOA | 22,402 | 22,850 | 23,307 | 23,773 | 24,248 | 24,491 |
Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million.
Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016.
Instructions:
-
Round all answers to the nearest whole number, except for discount factors and stock price per share.
- Round discount factors to 5 decimal places.
- Round stock price per share to two decimal places.
- Do not use negative signs with any of your answers.
| Reported | Terminal | ||||||
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| ($ millions) | 2016 | 2017 | 2018 | 2019 | 2020 | Period | |
| Increase in NOA | Answer
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| FCFF (NOPAT - Increase in NOA) | Answer
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| Discount factor [1/(1+rw)t] | Answer
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| Present value of horizon FCFF | Answer
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| Cum. present value of horizon FCFF | Answer
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| Present value of terminal FCFF | Answer
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| Total firm value | Answer
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| NNO | Answer
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| Firm equity value | Answer
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| Shares outstanding (millions) | Answer
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| Stock price per share | Answer
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