Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. $ millions Sales NOPAT NOA Forecast Horizon Period Terminal Period Reported 2018 2019 2020 2021 2022 $108,203 $115,777 $123,882 $132,553 $141,832 $144,669 12,073 12.967 13,875 14,846 15,885 16,203 25,546 27,332 29,245 31,292 33,483 34,152 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $27,424 million, Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: s b. Home Depot stock closed at $190.06 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?
Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. $ millions Sales NOPAT NOA Forecast Horizon Period Terminal Period Reported 2018 2019 2020 2021 2022 $108,203 $115,777 $123,882 $132,553 $141,832 $144,669 12,073 12.967 13,875 14,846 15,885 16,203 25,546 27,332 29,245 31,292 33,483 34,152 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $27,424 million, Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: s b. Home Depot stock closed at $190.06 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?
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
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Transcribed Image Text:Estimating Share Value Using the DCF Model
Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the
company labels fiscal 2018.
Reported
S millions 2018
Sales
NOPAT
NOA
Forecast Horizon Period
Terminal
2019 2020 2021 2022 Period
$108,203 $115,777 $123,882 $132,553 $141,832 $144,669
12,073 12,967 13,875 14,846 15,885 16,203
27,332 29,245 31,292 33,483 34,152
25,546
Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of
1,105 million, net nonoperating obligations (NNO) of $27,424 million.
Required
a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019.
Note: Do not round until your final answer; round your final answer to two decimal places.
Stock price per share: $
b. Home Depot stock closed at $190.06 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare
with this closing price?
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