Estimating Share Value Using the DCF Model Assume following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,750 $ 4,500 $ 5,400 $ 6,480 $ 7,776 $ 7,853 NOPAT 464 539 654 794 982 960 NOA 1,320 1,602 1,933 2,332 2,791 2,802 Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(261) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations). (a) Estimate the value of a share of Abercrombie & Fitch common stock using the discounted cash flow (DCF) model as of January 29, 2011. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Do not use negative signs with any of your answers. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal 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 ] (round to 5 decimal places) 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 (round one decimal place) Stock price per share Answer (round two decimal places)
Estimating Share Value Using the DCF Model Assume following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,750 $ 4,500 $ 5,400 $ 6,480 $ 7,776 $ 7,853 NOPAT 464 539 654 794 982 960 NOA 1,320 1,602 1,933 2,332 2,791 2,802 Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(261) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations). (a) Estimate the value of a share of Abercrombie & Fitch common stock using the discounted cash flow (DCF) model as of January 29, 2011. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Do not use negative signs with any of your answers. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal 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 ] (round to 5 decimal places) 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 (round one decimal place) Stock price per share Answer (round two decimal places)
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
Assume following are
| Reported | Horizon Period | |||||
|---|---|---|---|---|---|---|
| (In millions) | 2011 | 2012 | 2013 | 2014 | 2015 | Terminal Period |
| Sales | $ 3,750 | $ 4,500 | $ 5,400 | $ 6,480 | $ 7,776 | $ 7,853 |
| NOPAT | 464 | 539 | 654 | 794 | 982 | 960 |
| NOA | 1,320 | 1,602 | 1,933 | 2,332 | 2,791 | 2,802 |
Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(261) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations).
(a) Estimate the value of a share of Abercrombie & Fitch common stock using the discounted cash flow (DCF) model as of January 29, 2011.
Rounding instructions:
-
Round answers to the nearest whole number unless noted otherwise.
-
Use your rounded answers for subsequent calculations.
Do not use negative signs with any of your answers.
| Reported | Horizon Period | |||||
|---|---|---|---|---|---|---|
| (In millions) | 2011 | 2012 | 2013 | 2014 | 2015 | Terminal Period |
| Increase in NOA | Answer
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Answer
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Answer
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Answer
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Answer
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| FCFF (NOPAT - Increase in NOA) | Answer
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Answer
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Answer
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Answer
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Answer
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| Discount factor [1 / (1 + rw)t ] | (round to 5 decimal places) | Answer
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Answer
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Answer
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Answer
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| Answer
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Answer
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Answer
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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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(round one decimal place) | ||||
| Stock price per share | Answer
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(round two decimal places) |
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