a. Forecast the terminal period values assuming the following terminal period growth rate. Assumption Terminal period growth rate 2% Reported Forecast Horizon Period Terminal $ millions 2018 2019 2020 2021 2022 Period Sales $173,318 $183,563 $194,423 $205,935 $218,138 Answer NOPAT 23,457 24,644 25,969 27,374 28,862 Answer NOA 371,601 393,493 416,949 441,813 468,169 Answer b. Estimate the value of a share of AT&T common stock using the discounted cash flow (DCF) model as of December 31, 2018 using the following assumptions and the information above. Assumptions Discount rate (WACC) 5.70% Common shares outstanding 7,281.6 million Net nonoperating obligations (NNO) $177,717 million Noncontrolling interest $12,357 million

		Reported	Forecast Horizon				Terminal
	($ millions)	2018	2019	2020	2021	2022	Period
	Increase in NOA		Answer	Answer	Answer	Answer	Answer
	FCFF (NOPAT - Increase in NOA)		Answer	Answer	Answer	Answer	Answer
	Present value of horizon FCFF		Answer	Answer	Answer	Answer
	Cum. present value of horizon FCFF	Answer
	Present value of terminal FCFF	Answer
	Total firm value	Answer
	Less (plus) NNO	Answer
	Less NCI	Answer
	Firm equity value	Answer
	Shares outstanding (millions)	Answer
	Stock price per share	Answer

c. AT&T closed at $30.85 on February 20, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?

AnswerHigherLower

d. If WACC has been 6.2%, what would the valuation estimate have been?