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 PeriodTerminal$ millions 2018Sales$75,956NOPATNOA3,26923,62020192020 20212022$79,124 $83,680 $87,234 $92,1964,002 3,572 4,351 3,93924,197 26,007 26,677 28,611Period$93,4284,61728,571Answer the following requirements with the following assumptions:AssumptionsTerminal period growth rateDiscount rate (WACC)Common shares outstanding2%7.63%517.80 millionNet nonoperating obligations (NNO) $12,323 millionEstimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019.Increase in NOA($ millions)FCFF (NOPAT-Increase in NOA)Present value of horizon FCFFReported2018Forecast HorizonTerminal2019202020212022Period0x $0x0x$0x0х0x0x0x0x0x0x0x0x0xCum. present value of horizon FCFFxPresent value of terminal FCFFxTotal firm valuexNNO0x$Firm equity value0xShares outstanding (millions)0x$0xStock price per share

The stock price is the value of a single share of a business. It fluctuates according to investors'…

Answered: Estimate the value of a share of Target…

Cornerstones of Financial Accounting

4th Edition

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...

See similar textbooks

Similar questions

The Jimenez Corporation’s forecasted 2020 financial statements follow, along with some industry average ratios. Calculate Jimenez’s 2020 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez’s projected strengths and weaknesses. Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2020 Jimenez Corporation: Forecasted Income Statement for 2020 Jimenez Corporation: Per Share Data for 2020 Notes: aIndustry average ratios have been stable for the past 4 years. bBased on year-end balance sheet figures. cCalculation is based on a 365-day year.
Estimating Share Value Using the DCF Model Following are forecasts of Illinois Tool Works Inc. sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 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. Terminal Forecast Horizon Period 2019 2020 2021 2022 Period $7,607 $6,262 $6,637 $7,036 $7,458 $5,907 1,084 1,152 1,221 1,294 1,372 1,400 3,785 4,011 4,252 4,507 4,778 4,873 $ millions Sales NOPAT NOA Reported 2018 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate 2% 7.35% Discount rate (WACC) Common shares outstanding 131.00 million Net nonoperating obligations (NNO) $2,482 million (a) Estimate the value of a share of ITW's common stock using the discounted cash flow (DCF) model as of December 31, 2018. Forecast Horizon ($ millions) Increase in NOA FCFF (NOPAT -…
Estimating Share Value Using the ROPI Model Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2018, for Humana. 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 Horizon period Terminal millions Sales NOPAT NOA 2018 2019 2020 2021 2022 $56,912 $57,766 $58,632 $59,512 $60,404 2,492 2,542 2,580 2,619 2,658 4,097 4,158 4,221 4,284 4,032 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate 1% Discount rate (WACC) 7.8% Common shares outstanding 135.6 million Net nonoperating obligations (NNO) $(6,129) million ($ millions) ROPI (NOPAT- [NOABeg x rw]) Present value of horizon ROPI Cum present value of horizon ROPI $ Present value of terminal ROPI NOA Total firm value Less NNO Firm equity value Shares outstanding (millions) Stock price per…
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 $ millions 2018 Terminal 2019 2020 2021 2022 $79,124 $83,830 $87,234 $92,346 Period $93,428 4,767 Sales $76,106 NOPAT 3,269 NOA 23,770 4,152 3,572 4,501 3,939 24,197 26,157 26,677 28,761 28,571 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) $12,473 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. ($ millions) Increase in NOA…
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 Terminal $ millions 2018 2019 Sales $75,356 NOPAT 3,269 NOA 23,020 2020 2021 Period $79,124 $83,080 $87,234 $91,596 $93,428 3,402 3,572 3,751 3,939 4,017 24,197 25,407 26,677 28,011 28,571 2022 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate 296 Discount rate (WACC) 7.63% Common shares outstanding 517.80 million Net nonoperating obligations (NNO) $11,723 million Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2019. ($ millions) Increase in NOA…
Estimating Share Value Using the ROPI Model Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2018, for Humana. Terminal 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 place Reported Horizon period $ millions 2018 2019 2020 2021 2022 Period Sales $56,880 $57,734 $58,600 $59,480 $60,372 2,492 2,542 2,580 2.619 2,658 4,000 4,065 4,126 4,189 4,252 NOPAT NOA $60,976 2,684 4,295 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) 19 7.8% Common shares outstanding 135.6 million Net nonoperating obligations (NNO) S(6,161) million NNO is negative because Humana's nonoperating assets exceed its nonoperating liabilities. (a) Estimate the value of a share of common stock using the residual operating income (ROPI) model as of December 31,…
Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Logitech's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands). Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places. Financial information Net sales $2,091,242 Net operating profit after tax (NOPAT) 158,522 Net operating assets (NOA) 428,867 Use the parsimonious method to forecast Logitech's sales, NOPAT, and NOA for fiscal years ended March 31, 2020 through 2023 using the following assumptions. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with two decimal places.. Note: When completing the question…
Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Logitech's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands). Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places. Financial information Net sales Net operating profit after tax (NOPAT) Net operating assets (NOA) $2,788,322 211,362 571,823 Use the parsimonious method to forecast Logitech's sales, NOPAT, and NOA for fiscal years ended March 31, 2020 through 2023 using the following assumptions. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with two decimal places_. Note: When completing the question…
Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Logitech's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands). Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places. Financial information Net sales Net operating profit after tax (NOPAT) Net operating assets (NOA) $2,091,242 158,522 428,867 Use the parsimonious method to forecast Logitech's sales, NOPAT, and NOA for fiscal years ended March 31, 2020 through 2023 using the following assumptions. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with two decimal places_. Note: When completing the question…
Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. Forecast Horizon Period Reported Terminal S millions 2018 2019 2020 2021 2022 Period Sales $99,547 $106,515 $113,971 $121,949 $130,485 $133,095 NOPAT 11,107 11,930 12,765 13,658 14,614 14,907 NOA 23,502 25,145 26,905 28,789 30,804 31,420 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $25,230 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ 0 b. Home Depot stock closed at $174.86 on March 28, 2019, the date the…
Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. Reported S millions 2018 Sales NOPAT NOA Forecast Horizon Period Terminal 2019 2020 2021 2022 Period $108,203 $115,777 $123,882 $132,553 $141,832 $144,669 12,073 12,967 13,875 14,846 15,885 16,203 27,332 29,245 31,292 33,483 34,152 25,546 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $27,424 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ b. Home Depot stock closed at $190.06 on March 28, 2019, the date the…
Required:a. Calculate the following ratios for Sweets plc for 2021 and 2020, showing the formulas and workings:1- ROCE2- ROE3- Earnings per share

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

SEE MORE TEXTBOOKS