Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for Colgate-Palmolive Company for 2016 through 2019.

$ millions Reported 2015 Forecast Horizon 2016 2017 2018 2019

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Required

a. Forecast the terminal period values assuming a 1% terminal period growth for all three model inputs, that is Sales, NOPAT, and NOA.

b. Estimate the value of a share of Colgate-Palmolive common stock using the discounted cash flow

(DCF) model; assume a discount rate (WACC) of 7.5%, common shares outstanding of 893 million, net nonoperating obligations (NNO) of $5,601 million, and noncontrolling interest (NCI) from the balance sheet of $255 million.

c. Colgate-Palmolive’s stock closed at $67.22 on February 18, 2016, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?

d. The forecasts you completed assumed a terminal growth rate of 1%. What if the terminal rate had been 2%. What would your estimated stock price have been?

e. What would WACC have to be to warrant the actual stock price on February 18, 2016?