Following are forecasts of Abercrombie \& Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 31, 2008.

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 \(\$(279)\) 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 31, 2008.
b: Abercrombie \& Fitch (ANF) stock closed at \(\$ 77.56\) on March 2, 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) 2008 2009 2010 2011 2012 Period Sales. NOPAT $3,750 $4,500 $5,400 $6,480 $7,776 $7,853 464 557 668 802 962 972 NOA . 1,339 1,607 1,928 2,314 2,777 2,804