(1). 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. Format each answer to two decimal places. Estimating Share Value Using the DCF ModelFollowing 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 Period20182019TerminalPeriod$93,428$76,0563,2692020 2021 2022$83,780 $87,234 $92,2963,572 4,451 3,939 4,71728,57123,720$ millionsSalesNOPATNOAAnswer the following requirements with the following assumptions:AssumptionsTerminal period growth rate2%Discount rate (WACC)7.63%Common shares outstanding517.80 millionNet nonoperating obligations (NNO) $12,423 millionEstimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019.Forecast Horizon20202021($ millions)Increase in NOAFCFF (NOPAT - Increase in NOA)Present value of horizon FCFFCum, present value of horizon FCFF $Present value of terminal FCFFTotal firm valueNNOFirm equity valueShares outstanding (millions)Stock price per share$79,1244,10224,197 26,107 26,677 28,711Reported2018$$$2019$$2022TerminalPeriod

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 $ millions 2018 Sales NOPAT NOA $76,056 3,269 23,720 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate 2% Discount rate (WACC) 7.63% Common shares outstanding 517.80 million Net nonoperating obligations (NNO) $12,423 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. Forecast Horizon Terminal 2020 2021 Period ($ millions) Increase in NOA FCFF (NOPAT - Increase in NOA) 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 2020 2021 2022 $79,124 $83,780 $87,234 $92,296 4,102 3,572 4,451 3,939 Terminal Period $93,428 4,717 24,197 26,107 26,677 28,711 28,571 Reported 2018 $ $ 2019 $ 2022 $

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q