Following are forecasts of 3M Company's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2007

Answer the following requirements assuming a discount rate (WACC) of \(6 \%\), a terminal period growth rate of \(1 \%\), common shares outstanding of 709.1 million, and net nonoperating obligations (NNO) of \(\$ 3,563\) million.

a. Estimate the value of a share of \(3 \mathrm{M}\) 's common stock using the discounted cash flow (DCF) model as of January 31, 2008

b. \(3 \mathrm{M}\) (MMM) stock closed at \(\$ 79.15\) on January 31, 2008. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?

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Horizon Period Reported Terminal (In millions) 2007 2008 2009 2010 2011 Period Sales.... $24,462 $25,318 $26,204 $27,121 $28,071 $28,351 NOPAT 4,201 3,545 3,669 3,797 3,930 3,969 NOA 15,310 16,879 17,469 18,081 18,714 18,901