Following are the income statement and balance sheet for Intel Corporation.

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a. Compute Intel's 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 \(35.6 \%\).

c. Forecast Intel's sales, NOPAT, and NOA for years 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 Intel common stock using the discounted cash flow (DCF) model as of December 29, 2007; assume a discount rate (WACC) of \(10 \%\), common shares outstanding of 5,818 million, and net nonoperating obligations (NNO) of \(\$(11,319)\) million (NNO is negative which means that Intel has net nonoperating investments).

e. Intel (INTC) stock closed at \$21.10 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?

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Year Ended (In millions) Net revenue. Cost of sales. INTEL CORPORATION Income Statement December 29, 2007 December 30, 2006 December 31, 2005 $38,334 $35,382 $38,826 18,430 17,164 15,777 Gross margin 19,904 18,218 23,049 Research and development. 5,755 5,873 5,145 Marketing, general and administrative... 5,401 6,096 5.688 Restructuring and asset impairment charges. 516 555 Amortization of acquisition- related intangibles and costs. 16 42 126 Operating expenses.. 11,688 12,566 10,959 Operating income. 8,216 5,652 12,090 Gains (losses) on equity securities, net 157 214 (45) Interest and other, net 793 1,202 565 Income before taxes.. 9,166 7,068 Provision for taxes. Net income... 2,190 2,024 12,610 3,946 $ 6,976 $ 5,044 $ 8,664