a. Estimate the value of a share of Walmart's common stock using the discounted cash flow (DCF)

model as of January 31, 2016.

b. Walmart (WMT) stock closed at $68.80 on March 30, 2016. For each of the following assumptions,

determine the value that supports the $68.80 stock price. (Hint: Use the What-if-Analysis in Excel.)

? Weighted average cost of capital

? Terminal growth rate

c. Determine the NOPM and NOAT implicit in the horizon and terminal period forecasts of NOPAT and

NOA.

d. sensitivity analysis of Walmart's stock price for changes in NOPM and NOAT. Vary both

of these assumptions (up and down) by 10%. Which assumption has more impact on Walmart's estimated

stock price?

P13-21. Forecasting with Parsimonious Method and Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Nike Inc. NIKE INC. Consolidated Income Statement May 31, May 31, For Year Ended ($ millions) 2016 2015 Revenues . . . $32,376$30,601 Cost of sales. . . 17,405 16,534 Gross profit. . .... 14,971 14,067 Demand creation expense . 3,278 3,213 Operating overhead expense . . 7,191 6.679 Total selling and administrative expense . . . 10,4699,892 Interest expense (income), net . .... 19 28 Other (income) expense, net .. (140) (58) Income before income taxes . . 4,6234,205 Income tax expense . . . ... 863 932 Net income . . $ 3,760 $ 3,273 continuedMay 31, May 31, $ millions 2016 2015 Current assets Cash and equivalents. . $ 3,138 $ 3,852 Short-term investments 2,3192,072 Accounts receivable, net 3,2413,358 Inventories . .. 4,8384,337 Prepaid expenses and other current assets. 1,489 1,968 Total current assets . 15,025 15,587 Property, plant and equipment, net 3,5203,011 Identifiable intangible assets, net. 281 281 Goodwill 131 131 Deferred income taxes and other assets . 2,439 2,587 Total assets. . $21,396 $21,597 Current liabilities Current portion of long-term debt $ 44 $ 107 Notes payable 1 74 Accounts payable. 2,191 2,131 Accrued liabilities . . 3,037 3,949 Income taxes payable 85 71 Total current liabilities. 5,358 6,332 Long-term debt 2,010 1,079 Deferred income taxes and other liabilities 1,770 1,479 Total liabilities .. 9,138 8,890 Shareholders' equity Class A convertible common stock 00 Class B common stock 33 Capital in excess of stated value . 7,786 6,773 Accumulated other comprehensive income.. 318 1,246 Retained earnings 4,151 4,685 Total shareholders' equity 12,258 12,707 Total liabilities and shareholders' equity. . $21,396 $21,597Sales growth. . ... 6% Net operating profit margin (NOPM). 2016 ratios rounded to three decimal places Net operating asset turnover (NOAT), year-end. . ... 2016 ratios rounded to three decimal places