Estimating Share Value Using the DCF Model Assume following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,750 $ 4,500 $ 5,400 $ 6,480 $ 7,776 $ 7,853 NOPAT 464 539 654 794 982 960 NOA 1,320 1,602 1,933 2,332 2,791 2,802 Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(261) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations). (a) Estimate the value of a share of Abercrombie & Fitch common stock using the discounted cash flow (DCF) model as of January 29, 2011. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Do not use negative signs with any of your answers. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal 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 ] (round to 5 decimal places) 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 (round one decimal place) Stock price per share Answer (round two decimal places)

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter3: Analysis Of Financial Statements

Section: Chapter Questions

Problem 14P: The Jimenez Corporation’s forecasted 2020 financial statements follow, along with some industry...

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Estimating Share Value Using the DCF Model
Assume following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011.

	Reported	Horizon Period
(In millions)	2011	2012	2013	2014	2015	Terminal Period
Sales	$ 3,750	$ 4,500	$ 5,400	$ 6,480	$ 7,776	$ 7,853
NOPAT	464	539	654	794	982	960
NOA	1,320	1,602	1,933	2,332	2,791	2,802

Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(261) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations).

(a) Estimate the value of a share of Abercrombie & Fitch common stock using the discounted cash flow (DCF) model as of January 29, 2011.

Rounding instructions:

Round answers to the nearest whole number unless noted otherwise.
Use your rounded answers for subsequent calculations.

Do not use negative signs with any of your answers.

	Reported	Horizon Period
(In millions)	2011	2012	2013	2014	2015	Terminal Period
Increase in NOA		Answer	Answer	Answer	Answer	Answer
FCFF (NOPAT - Increase in NOA)		Answer	Answer	Answer	Answer	Answer
Discount factor [1 / (1 + r_w)^t ]	(round to 5 decimal places)	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	(round one decimal place)
Stock price per share	Answer	(round two decimal places)

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