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Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA)
Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. $ millions Sales NOPAT NOA Forecast Horizon Period Reported Terminal 2018 2019 2020 2021 2022 Period $106,039 $113,461 $121,404 $129,902 $138,995 $141,776 11,832 12,708 13,598 14,549 15,567 15,879 25,035 26,785 28,660 30,666 32,813 33,469 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $26,876 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ b. Home Depot stock closed at $186.26 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price
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