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 $76,056 3,269 23,720 $ millions Sales NOPAT NOA 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) $12,423 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. Terminal Forecast Horizon 2020 2021 Period ($ millions) Increase in NOA FCFF (NOPAT- Increase in NOA) 2020 2021 2022 $79,124 $83,780 $87,234 $92,296 Terminal Period $93,428 4,102 3,572 4,451 3,939 4,717 24,197 26,107 26,677 28,711 28,571 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 Reported 2018 $ 2019 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 2018 $76,056 3,269 23,720 $ millions Sales NOPAT NOA 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) $12,423 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. Terminal Forecast Horizon 2020 2021 Period ($ millions) Increase in NOA FCFF (NOPAT- Increase in NOA) 2020 2021 2022 $79,124 $83,780 $87,234 $92,296 Terminal Period $93,428 4,102 3,572 4,451 3,939 4,717 24,197 26,107 26,677 28,711 28,571 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 Reported 2018 $ 2019 2022 $
Cornerstones of Financial Accounting
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ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...
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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
2018
2019
Terminal
Period
$93,428
$76,056
3,269
2020 2021 2022
$83,780 $87,234 $92,296
3,572 4,451 3,939 4,717
28,571
23,720
$ millions
Sales
NOPAT
NOA
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) $12,423 million
Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019.
Forecast Horizon
2020
2021
($ 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
$79,124
4,102
24,197 26,107 26,677 28,711
Reported
2018
$
$
$
2019
$
$
2022
Terminal
Period
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