Following are the income statement and balance sheet for Abbott Laboratories (ABT).

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a. Compute net operating assets (NOA) for year end 2007.

b. Compute net operating profit after tax (NOPAT) for 2007 assuming a federal and state statutory tax rate of \(35.4 \%\)

c. Forecast Abbott Laboratories' sales, NOPAT, and NOA for 2008 through 2011 using the following assumptions:

Forecast the terminal period value assuming a 1% terminal period growth and using the NOPM and NOAT assumptions above.

d. Estimate the value of a share of Abbott Laboratories' common stock using the discounted cash flow (DCF) model as of December 31, 2008; assume a discount rate (WACC) of 5%, common shares outstanding of 1,549.2 million, and net nonoperating obligations (NNO) of S11,228 million. Abbott Laboratories (ABT) stock closed at $56.18 on January 31, 2008. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference? What investment position is suggested from your results? e.

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Year Ended December 31 ($ 000) Net sales..... ABBOTT LABORATORIES Income Statement 2007 2006 2005 $25,914,238 $22,476,322 $22,337,808 Cost of products sold.... Research and development. Acquired in-process and collaborations research and development... 11,422,046 9,815,147 10,641,111 2,505,649 2,255,271 1,821,175 2,014,000 17,131 Selling, general and administrative Total operating cost and expenses 7,407,998 6,349,685 5,496,123 21,335,693 20,434,103 17,975,540 Operating earnings... 4,578,545 2,042,219 4,362,268 Interest expense. 593,142 416,172 241,355 Interest revenue (136,752) (123,825) (87,693) Other (income) expense, net. (Income) from TAP Pharmaceutical Products joint venture Net foreign exchange (gain) loss Earnings before taxes.. Taxes on earnings. Net earnings... (498,016) (475,811) (441,388) 14,997 28,441 21,804 135,526 (79,128) 8,270 4,469,648 2,276,370 4,619,920 863,334 559,615 1,247,855 $ 3,606,314 $ 1,716,755 $ 3,372,065