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 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 Period Terminal $ millions 2018 2019 Sales $75,356 NOPAT 3,269 NOA 23,020 2020 2021 Period $79,124 $83,080 $87,234 $91,596 $93,428 3,402 3,572 3,751 3,939 4,017 24,197 25,407 26,677 28,011 28,571 2022 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate 296 Discount rate (WACC) 7.63% Common shares outstanding 517.80 million Net nonoperating obligations (NNO) $11,723 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. ($ millions) Increase in NOA FCFF (NOPAT - Increase in NOA) Present value of horizon FCFF Reported 2018 Forecast Horizon 2019 2020 2021 2022 Terminal Period $ 2,192 x $ 2,902 * $ 0 x $ 0 * $ 0 x 1,911.09 x 0 × 0x 0 × 0 x 0 x 0 x 0x 0 x Cum. present value of horizon FCFF $ 37,683.26 x Present value of terminal FCFF 49,157.79 x Total firm value 86,841.05 x NNO 36,834.76 x Firm equity value $ 0 x Shares outstanding (millions) 0 x Stock price per share $ 71.08 x
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 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 Period Terminal $ millions 2018 2019 Sales $75,356 NOPAT 3,269 NOA 23,020 2020 2021 Period $79,124 $83,080 $87,234 $91,596 $93,428 3,402 3,572 3,751 3,939 4,017 24,197 25,407 26,677 28,011 28,571 2022 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate 296 Discount rate (WACC) 7.63% Common shares outstanding 517.80 million Net nonoperating obligations (NNO) $11,723 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. ($ millions) Increase in NOA FCFF (NOPAT - Increase in NOA) Present value of horizon FCFF Reported 2018 Forecast Horizon 2019 2020 2021 2022 Terminal Period $ 2,192 x $ 2,902 * $ 0 x $ 0 * $ 0 x 1,911.09 x 0 × 0x 0 × 0 x 0 x 0 x 0x 0 x Cum. present value of horizon FCFF $ 37,683.26 x Present value of terminal FCFF 49,157.79 x Total firm value 86,841.05 x NNO 36,834.76 x Firm equity value $ 0 x Shares outstanding (millions) 0 x Stock price per share $ 71.08 x
Cornerstones of Financial Accounting
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Transcribed Image Text: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
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 Period
Terminal
$
millions
2018
2019
Sales
$75,356
NOPAT
3,269
NOA
23,020
2020 2021
Period
$79,124 $83,080 $87,234 $91,596 $93,428
3,402 3,572 3,751 3,939 4,017
24,197 25,407 26,677 28,011 28,571
2022
Answer the following requirements with the following assumptions:
Assumptions
Terminal period growth rate
296
Discount rate (WACC)
7.63%
Common shares outstanding
517.80 million
Net nonoperating obligations (NNO) $11,723 million
Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019.
($ millions)
Increase in NOA
FCFF (NOPAT - Increase in NOA)
Present value of horizon FCFF
Reported
2018
Forecast Horizon
2019
2020
2021
2022
Terminal
Period
$
2,192 x $
2,902 * $
0 x $
0 * $
0 x
1,911.09 x
0 ×
0x
0 ×
0 x
0 x
0 x
0x
0 x
Cum. present value of horizon FCFF $ 37,683.26 x
Present value of terminal FCFF
49,157.79 x
Total firm value
86,841.05 x
NNO
36,834.76 x
Firm equity value
$
0 x
Shares outstanding (millions)
0 x
Stock price per share
$
71.08 x
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