Provided below are an analyst’s forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 for Abbott Laboratories.| ($ millions) | Reported 2020 | 2021 | 2022 | 2023 | 2024 | Terminal Period ||-------------------|--------------|-----------|-----------|-----------|-----------|-----------------|| Revenue: | $34,608.0 | $36,684.5 | $38,885.5 | $41,218.7 | $43,691.8 | $44,565.6 || NOPAT: | $4,774.4 | $5,060.9 | $5,364.5 | $5,686.4 | $6,027.6 | $6,148.1 || NOA: | $44,579.0 | $47,253.7 | $50,089.0 | $53,094.3 | $56,280.0 | $57,405.6 |The following additional information is provided (dollar and share amounts in millions):- Common shares outstanding: 1,771.230- Net nonoperating obligations (NNO): $11,576.0- Noncontrolling interest (NCI): $219.0- Preferred stock: $0.0- WACC: 4.0%- Terminal growth: 2.0%Use the discounted cash flow (DCF) method to answer the following questions. Do not round intermediate calculations. All values other than per-share amounts are shown in millions.| Question | Answer ||---------------------------------------------------------------------------------------------------------------------------------|---------------------|| According to the DCF model, what is the total value of the firm? | $224,108.3 || According to the DCF model, what is the value per share of common stock? | $119.87 || The company’s stock closed at $123.04 on 02/19/2021, the date the 10-K was filed with the SEC. In comparing your valuation estimate (also known as ‘intrinsic value’) with the actual stock price, was the stock overvalued or undervalued, and why? | Over

Here, WACC4%Terminal Growth2.00%$ millionsReported 2022Forecast Horizon PeriodTerminal Period2023202420252026Revenue $ 34,608.00 $ 36,684.50 $ 38,885.50 $ 41,218.70 $ 43,691.80 $ 44,565.60NOPAT $ 4,774.40 $ 5,060.90 $ 5,364.50 $ 5,686.40 $ 6,027.60 $ 6,148.10NOA $ 44,579.00 $ 47,253.70 $ 50,089.00 $ 53,094.30 $ 56,280.00 $ 57,405.60Calculation of Value of Firm and Price per Share is as follows:Workings:Calculations:Total Value of Firm is $224,108.3Value per Share is $119.87The Stock is overvalued becuase market price ($123.04) is greater than intrinsic value of share ($119.87)

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Provided below are an analyst's forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 for Abbott Laboratories. Forecast Horizon Period 2022 2023 $34,608.0 $36,684.5 $38,885.5 $41,218.7 $43,691.8 $4,774.4 $5,060.9 $5,364.5 $5,686.4 $6,027.6 $44,579.0 $47,253.7 $50,089.0 $53,094.3 $56,280.0 ($ millions) Reported 2020 2021 Revenue: NOPAT: NOA: 2024 Terminal Period $44,565.6 $6,148.1 $57,405.6 The following additional information is provided (dollar and share amounts in millions). Common shares outstanding: 1,771.230 Net nonoperating obligations (NNO): $11,576.0 Noncontrolling interest (NCI): $219.0 Preferred stock: $0.0 WACC: 4.0% Terminal growth: 2.0%

Provided below are an analyst's forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 for Abbott Laboratories. Forecast Horizon Period 2022 2023 $34,608.0 $36,684.5 $38,885.5 $41,218.7 $43,691.8 $4,774.4 $5,060.9 $5,364.5 $5,686.4 $6,027.6 $44,579.0 $47,253.7 $50,089.0 $53,094.3 $56,280.0 ($ millions) Reported 2020 2021 Revenue: NOPAT: NOA: 2024 Terminal Period $44,565.6 $6,148.1 $57,405.6 The following additional information is provided (dollar and share amounts in millions). Common shares outstanding: 1,771.230 Net nonoperating obligations (NNO): $11,576.0 Noncontrolling interest (NCI): $219.0 Preferred stock: $0.0 WACC: 4.0% Terminal growth: 2.0%

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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Question

Provided below are an analyst’s forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 for Abbott Laboratories.

| ($ millions) | Reported 2020 | 2021 | 2022 | 2023 | 2024 | Terminal Period |
|-------------------|--------------|-----------|-----------|-----------|-----------|-----------------|
| Revenue: | $34,608.0 | $36,684.5 | $38,885.5 | $41,218.7 | $43,691.8 | $44,565.6 |
| NOPAT: | $4,774.4 | $5,060.9 | $5,364.5 | $5,686.4 | $6,027.6 | $6,148.1 |
| NOA: | $44,579.0 | $47,253.7 | $50,089.0 | $53,094.3 | $56,280.0 | $57,405.6 |

The following additional information is provided (dollar and share amounts in millions):

- Common shares outstanding: 1,771.230
- Net nonoperating obligations (NNO): $11,576.0
- Noncontrolling interest (NCI): $219.0
- Preferred stock: $0.0
- WACC: 4.0%
- Terminal growth: 2.0%

Use the discounted cash flow (DCF) method to answer the following questions. Do not round intermediate calculations. All values other than per-share amounts are shown in millions.

| Question | Answer |
|---------------------------------------------------------------------------------------------------------------------------------|---------------------|
| According to the DCF model, what is the total value of the firm? | $224,108.3 |
| According to the DCF model, what is the value per share of common stock? | $119.87 |
| The company’s stock closed at $123.04 on 02/19/2021, the date the 10-K was filed with the SEC. In comparing your valuation estimate (also known as ‘intrinsic value’) with the actual stock price, was the stock overvalued or undervalued, and why? | Over

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