1. Making Sense of Stock Price As of March 27, 2023, Waste Management (stock ticker: WM)'s stock price is $154.42 per share. Waste Management, Inc. (WM) NYSE Nasdaq Real Time Price Currency in USD 154.42 -0.04 (-0.03%) As of 03:07PM EDT Market open Follow 88 Visitors trend 2W 10w+ 9M1 Summary Company Insights Chart Conversations Statistics Historical Data Profile Financials Analysis Options Previous Close 154.46 Market Cap Open 155.50 Bid 154.80 x 900 Beta (5Y Monthly) PE Ratio (TTM) 63.0478 10 50 1M 6M YTD 1Y SY Max. 0.73 Full screen 156.80 27.93 155.80 Ask 154.83 x 800 EPS (TTM) 5.53 Day's Range 154.25 -156.43 52 Week Range 138.89-175.98 Volume 722.343 Earnings Date Forward Dividend & Yield Ex-Dividend Date Apr 26, 2023 154.80 15436 153.80 2.80 (1.86%) Mar 09,2023 10 AM 12 PM 02 PM Avg. Volume Trade prices are not sourced from all mark 1,790,325 ly Target Est 168.31 To assess whether the stock is over/undervalued, we aim to estimate the share price using Discounted Free Cash Flow approach. Following is Waste Management's sales forecast for the next five years along with the current year of 2023. Year 2023 2024 2025 2026 2027 2028 (current year) (year 1) (year 2) (year 3) (year 4) (year 5) Sales 20,678 21,734 23,201 24,617 25,905 26,812 ($ million) In addition, based on the company's past profitability and investment needs, we assume the followings: EBIT is 15.8% of sales. Tax rate is 21.6% of EBIT. Accounts Receivable is expected to be 15.1% of sales. Accounts Payable is expected to be 16.1% of sales. No inventory is required. Capital expenditure is expected to be 11.5% of sales. Depreciation is expected to be 10.6% of sales. (a) To estimate free cash flows (FCF) for years 1 through 5, fill the following table. Year 1 Year 2 Year 3 Year 4 Year 5 Sales Depreciation EBIT Taxes: Accounts Receivable A Accounts Receivable Accounts Payable A Accounts Payable CapEx FCF