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 2019 Terminal Period $93,428 4,517 28.571 $ millions 2018 Sales NOPAT NOA $75,856 3.269 23.520 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) 2% 7.63% Common shares outstanding 517.80 million Net nonoperating obligations (NNO) $12,223 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. Terminal Period ($ millions) Increase in NOA FCFF (NOPAT - Increase in NOA) Present value of horizon FCFF 2020 2021 2022 $79,124 $83,580 $87,234 $92,096 3.902 3.572 4,251 3.939 24,197 25.907 26,677 28,511 Reported 2018 Cum, present value of horizon FCFF $ Present value of terminal FCFF Total firm value NNO Firm equity value Shares outstanding (millions) Stock price per share $ $ $ 2019 $ Forecast Horizon 2020 2021 $ $ 2022 $
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 2019 Terminal Period $93,428 4,517 28.571 $ millions 2018 Sales NOPAT NOA $75,856 3.269 23.520 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) 2% 7.63% Common shares outstanding 517.80 million Net nonoperating obligations (NNO) $12,223 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. Terminal Period ($ millions) Increase in NOA FCFF (NOPAT - Increase in NOA) Present value of horizon FCFF 2020 2021 2022 $79,124 $83,580 $87,234 $92,096 3.902 3.572 4,251 3.939 24,197 25.907 26,677 28,511 Reported 2018 Cum, present value of horizon FCFF $ Present value of terminal FCFF Total firm value NNO Firm equity value Shares outstanding (millions) Stock price per share $ $ $ 2019 $ Forecast Horizon 2020 2021 $ $ 2022 $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
2019
2018
$75,856
2020 2021 2022
$79,124 $83,580 $87,234 $92,096
Terminal
Period
$93,428
3,269
3,902 3,572 4,251 3,939 4,517
23,520
24,197 25,907 26,677 28,511 28,571
$ millions
Sales
NOPAT
NOA
Answer the following requirements with the following assumptions:
Assumptions
Terminal period growth rate
2%
7.63%
Discount rate (WACC)
Common shares outstanding
517.80 million
Net nonoperating obligations (NNO) $12,223 million
Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019.
Terminal
Forecast Horizon
2020
2021
Period
($ millions)
Increase in NOA
FCFF (NOPAT - Increase in NOA)
Reported
2018
Present value of horizon FCFF
Cum. present value of horizon FCFF $
Present value of terminal FCFF
Total firm value
NNO
Firm equity value
Shares outstanding (millions)
Stock price per share
$
$
$
2019
$
$
$
2022
$
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