Estimating Share Value Using the DCF ModelFollowing are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 2, 2019, which we label fiscal year 2018.Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places.Reported Forecast Horizon PeriodTerminal$ millions 2018Sales$75,956NOPATNOA3,26923,62020192020 20212022$79,124 $83,680 $87,234 $92,1964,002 3,572 4,351 3,93924,197 26,007 26,677 28,611Period$93,4284,61728,571Answer the following requirements with the following assumptions:AssumptionsTerminal period growth rateDiscount rate (WACC)Common shares outstanding2%7.63%517.80 millionNet nonoperating obligations (NNO) $12,323 millionEstimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019.Increase in NOA($ millions)FCFF (NOPAT-Increase in NOA)Present value of horizon FCFFReported2018Forecast HorizonTerminal2019202020212022Period0x $0x0x$0x0х0x0x0x0x0x0x0x0x0xCum. present value of horizon FCFFxPresent value of terminal FCFFxTotal firm valuexNNO0x$Firm equity value0xShares outstanding (millions)0x$0xStock price per share

The stock price is the value of a single share of a business. It fluctuates according to investors'…

Answered: Estimate the value of a share of Target…

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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Treasury stock should be reported Group of answer choices in the Investments and Funds section of the balance sheet. as a deduction from total stockholders’ equity on the balance sheet. as a current asset only if it will be sold within the next year or the operating cycle, whichever is longer. as a current asset only if it will be sold within the next year or the operating cycle, whichever is shorter.
9. 10. Use the information below and the P/E as an Earnings Multiplier Model to find this stock's intrinsic value and determine whether it's over or under valued if its current price is $71.32. 2020 2021 2022 2023 2024 61.57 39.25 60.93 73.70 9.70 4.56 26.68 6.80 1.34 16.52 4.30 7.00 .60 .70 .80 .65 39.55 45.00 95.00 93.00 97.19 15.0 Bold figures are 21 .86 Value Line estimates 1.1% 1.2% 50 .80 64 76.35 70.79 124.24 107.76 37.7 3.9 1.94 1.2% VALUE LINE PUB. LLC 77.95 Revenues per sh 11.70 "Cash Flow" per sh 8.50 Earnings per sh A .88 Div'ds Decl'd per sh C .65 Cap'l Spending per sh 51.35 Book Value per sh Common Shs Outst'g B Avg Ann'l P/E Ratio Relative P/E Ratio Avg Ann'l Div'd Yield A stock selling for $20 has an intrinsic value of $10. Is it over or under valued?
Please use the Black-Scholes formula
Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. Current price per share of common stock $37.01 Expected dividend per share next year $1.39 Constant annual dividend growth rate 8.4% Risk-free rate of return 5.2%
In the beginning of January 2023 you want to estimate the value of a stock. On December 31 2022 the price of the stock was $63.5 and you believe that the annual dividend growth rate and stock price growth rate will be 7% for the years 2023, 2024 and 2025. The dividend of 2022 will be paid in 2023 and will be S 1.48. The discount rate is 11.5%. Calculate the price of the stock and say if it is over or undervalued
As an analyst at an investment bank, you are asked to compare the monthly returns of the two stocks Tesla and Apple Inc during the period of August 2020 to March 2021: Tesla, Xi Aug Sep Oct Nov Dec Jan Feb Mar 0.038 0.199 0.187 -0.069 0.481 0.392 -0.039 -0.150 Apple Inc, y: 0.184 -0.010 0.111 -0.042 0.027 0.052 0.051 -0.106 Σx₁ = 1.039 Σ(x-x)² = 0.3549 Σχ Σy = 0.267 Σ(y: - y)2 = 0.0564
You are considering purchasing a share of preferred stock with the following characteristics: par value = $100 dividend rate = 12% per year payment schedule = quarterly maturity date = required rate of return = 6% per year current market price = $135 per share Based on this information, answer the following: A. What is the dollar amount of the quarterly dividend on this stock? B. Using the Discounted Cash Flow Method, what is the dollar value of this stock? C. Using the Discounted Cash Flow Method, what is the annual expected return for this stock? D. Based on your answer to part B, should you invest in the stock? Why or why not? E.…
Calculate the end-of-year return for the following investment purchased for $14 at the beginning of 202X. Distributions and Prices Changes 202X Per-share income distributions: $0.20 Per-share capital gains distributions: $0.40 Year-end NAV: $15.25 Year-end market price: $15.00 If required, round your answer to two decimal places. a. 10.67% b. 11.43% c. 10.49% d. 13.21%
Assume the below information to answer the following question. Last Price A. 14.2% B. 18.9% OC. 16.8% OD. 11.0% Company Coupon Maturity Ford (F) 11.0 July 31, 2014 Based on the above table, what is the last yield for this bond? Last Yield 65.50 ? EST EST VOL. Spread UST (000s) 104 10 5,100 }
AT&T stock has the following probability distribution of expected prices one year from now: State Probability Price 1. 20% $ 15 2. 30% $ 22 3. 50% $ 31 If you buy AT&T today for $19 and it will pay a dividend during the year of $0.8 per share, what is your expected holding-period return on AT&T?
17. Based on the following table, if you invest $15,000 into AAPL stock at the beginning of the period, what would be the dollar value of your investment at the end of the time period? AAPL Date 2/1/2023 13.33% 3/1/2023 -13.99% 4/1/2023 6.53% 5/1/2023 -3.68% 6/1/2023 9.01% 7/1/2023 1.81% 8/1/2023 7.13% 9/1/2023 0.43% 10/1/2023 -2.66% 11/1/2023 5.33% 12/1/2023 4.77% 1/1/2024 12.89% Average Variance St. Dev. A. $15,512 B. $16,154 C. $19,467 D. $21,725 E. $22,831 3.41% 0.005910 7.69%
The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $44 or fall to $36. An investor buys put options with a strike price of $41. What is the price of each option? The risk-free interest rate is 2% per annum (assume discrete compounding). a. $2.35 b. $1.76 c. $2.18 d. $1.96

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