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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. Forecast Horizon Period Terminal Reported 2018 2019 2020 2021 2022 Period $5,907 $6,262 $6,637 $7,036 $7,458 $7,607 1,084 1,152 1,221 1,294 1,372 3,785 4,011 4,252 4,507 4,778 1,400 4,873 $ millions Sales NOPAT NOA Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) Common shares outstanding 2% 7.35% 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 - 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 $ $ Reported 2018 $ 2019 $ 2020 $ 2021 $ 2022 Terminal Period $

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. Forecast Horizon Period Terminal Reported 2018 2019 2020 2021 2022 Period $5,907 $6,262 $6,637 $7,036 $7,458 $7,607 1,084 1,152 1,221 1,294 1,372 3,785 4,011 4,252 4,507 4,778 1,400 4,873 $ millions Sales NOPAT NOA Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) Common shares outstanding 2% 7.35% 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 - 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 $ $ Reported 2018 $ 2019 $ 2020 $ 2021 $ 2022 Terminal Period $

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter2: Financial Statements, Cash Flow,and Taxes
Section: Chapter Questions
Problem 21SP: Begin with the partial model in the file Ch02 P21 Build a Model.xlsx on the textbooks Web site. a....
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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 - 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 $ $ Reported 2018 $ 2019 $ 2020 $ 2021 $ 2022 Terminal Period $
Transcribed Image Text: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 - 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 $ $ Reported 2018 $ 2019 $ 2020 $ 2021 $ 2022 Terminal Period $
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