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 January 30, 2016   Reported Horizon Period Terminal $ millions 2016 2017 2018 2019 2020 Period Sales $74,673 $76,166 $77,689 $79,243 $80,828 $81,636 NOPAT 3,360 3,427 3,496 3,566 3,637 3,674 NOA 22,402 22,850 23,307 23,773 24,248 24,491 Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million. Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016. Instructions: Round all answers to the nearest whole number, except for discount factors and stock price per share. Round discount factors to 5 decimal places. Round stock price per share to two decimal places. Do not use negative signs with any of your answers.     Reported Forecast Horizon Terminal ($ millions)   2016 2017 2018 2019 2020 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]     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             Stock price per share   Answer

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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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 January 30, 2016

  Reported Horizon Period Terminal
$ millions 2016 2017 2018 2019 2020 Period
Sales $74,673 $76,166 $77,689 $79,243 $80,828 $81,636
NOPAT 3,360 3,427 3,496 3,566 3,637 3,674
NOA 22,402 22,850 23,307 23,773 24,248 24,491


Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million.

Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016.

Instructions:

  • Round all answers to the nearest whole number, except for discount factors and stock price per share.
  • Round discount factors to 5 decimal places.
  • Round stock price per share to two decimal places.
  • Do not use negative signs with any of your answers.
    Reported Forecast Horizon Terminal
($ millions)   2016 2017 2018 2019 2020 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]     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
 
         
Stock price per share   Answer
 
         
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